Make no mistake, the proposed trade policies of both Hillary Clinton and Donald J. Trump, the 2016 Democratic and Republican Party candidates for president, would deeply harm the American economy. Furthermore, they would primarily hurt average American households on modest incomes, and especially many of the individuals and communities that were already hard hit by the crisis. Curbing trade will worsen rather than solve the problem of American income stagnation by reducing families’ purchasing power, and by further slowing productivity growth. In fact, our analysis shows the recession that the belligerent trade policies proposed by Trump would cause would devastate viable American businesses and their vicinities. Backing out of the Trans-Pacific Partnership (TPP) agreement with our allies, as both candidates currently
promise to do, would weaken our alliances in Asia, and embolden our rivals, thus eroding American national security.
There is a longstanding tradition of nonpartisan think tanks evaluating the major party candidates’ economic and foreign policies, usually starting with their tax and budget proposals. Since international economic policy has largely been an area of continuity and bipartisanship, at least since World War II, there has not been the need to examine trade in previous elections. In this election, however, the need is pressing for an unbiased, transparent, and evidence-based analysis.
Such an analysis is presented in this Peterson Institute for International Economics Briefing. We evaluate the Clinton and Trump trade proposals at face value. Where their statements have varied over time— and on these issues, they have done so less than on some others—we have relied on what views they return to and what their official campaign websites and documents state. It is not for us to guess at candidates’ motivations whether, say, a proposal is actually a threat to China for negotiating purposes or whether in someone’s heart of hearts they recognize the case for TPP. The public arguments made by presidential candidates, let alone by presidents, matter. It is simple reality that threats must be possible to put into action for them to be credible in influencing any deal. We must presume that what candidates running for office say they will do is at least close to what they will actually try to do. Our analysis shows that the next president could do almost all of what he or she proposes, at least temporarily.
Our analytical contribution in this Briefing is to work through empirically in detail the two candidates’ proposed trade policies in terms of what legally the president can do on her or his authority, what the impact would be on specific American industries and communities as well as on the economy as a whole, and what the foreign policy fallout would be, particularly in the Asia-Pacific. Our analysis is fact-based and transparent, with data, sources, and methods publicly available on the Institute’s website. The analysis underlying all of our assessments is thus reproducible—and in this instance, we also provide the ability for interested individuals to look at how the candidates’ trade policies would directly affect the economic well-being of any chosen industry, county, or state in the United States. Like all indepth Peterson Institute studies, this research was reviewed by external academic experts prior to publication.
We have no partisan goal with this research publication. Our objective is to prevent severe economic policy mistakes by the next president of the United States, whether by getting the two candidates to change their positions or by raising enough public awareness and congressional opposition to prevent such misguided policies from coming into effect. Our concern is about the policies, not the candidates or the parties. Had both candidates remained within the justified bipartisan consensus on trade policy that ran through the administrations of Presidents George W. Bush and Barack Obama, we would not have undertaken this project.
That said, our analysis shows that the two candidates’ proposed policies are not equivalent in the harm they would do to the US economy if implemented. Clinton’s proposed trade and international economic policies would damage American well-being, primarily but not solely due to her stated opposition to TPP and to further economic integration. The policies proposed by Trump are another matter altogether. His stated approach to the global economy of waging trade war and protecting uncompetitive special interests would be disastrous for American economic well-being and national security. Being independent and nonpartisan means that the Peterson Institute has to convey what our analysis reveals. We should not and will not play the common media game of saying that there are two sides to everything, or that if one candidate is bad, then the other must be equally bad, so as to convey false evenhandedness out of fear of being attacked. We call them as we see them: While Clinton’s stated trade policy would be harmful, Trump’s stated trade policy would be horribly destructive.
We hope that this research publication will generate greater public scrutiny of the two candidates’ positions on international trade and refocus the debate on what is economically justified. Such a return from misleading claims to reality, and the more sensible trade policies that should result, would better serve the interests of the vast majority of Americans—including those most vulnerable to the fluctuations of the US economy.
Adam S. Posen
President
Peterson Institute for International Economics
September 2016