Editor's pick: Originally published March 11, 2016
Republican frontrunner Donald Trump and Democratic challenger Bernie Sanders have made much of opposing free trade deals on the campaign trail, winning cheers and votes by claiming that free trade costs jobs. And this is a worrisome development, at least according to one of the country's leading experts on trade.
With typical flair, Trump often blames trade with China and Mexico for the erosion of the U.S. working-class while promising to be tougher in future trade negotiations.
"We're going to beat China, Japan, beat Mexico at trade," he said after winning the New Hampshire primary in February. "We're going to beat all of these countries that are taking so much of our money away from us on a daily basis...We have political hacks negotiating our deals for billions and billions and billions of dollars. Not going to happen anymore."
Bernie Sanders on Sunday, in a debate with Hillary Clinton, said 800,000 jobs have been lost as a result of NAFTA, and millions more jettisoned to China. Two days later, he surprised Clinton and most polls with an upset victory in the Michigan primary. Michigan is a state with a heavy manufacturing base.
Both candidates have assailed the Trans-Pacific Partnership, an extensive trade agreement with 12 countries including Japan, Malaysia, Singapore and Vietnam. Not surprisingly, both parties have put off voting on TPP until after November. Not even Republicans, historically enthusiastic supporters of free trade, are keen to vote on a trade pact with Asia during an election year.
All that has left Gary Hufbauer of the Peter Peterson Institute for International Economics, frustrated and more than a little angry.
As one of the country's foremost promoters of globalization and free trade, Hufbauer is worried that the rises of Trump and Sanders will provoke trade wars with China and Mexico, leading to slower economic growth. He's also concerned the next administration won't be as supportive of U.S. business expanding into foreign markets.
"There's this notion, which we think is completely wacko, that when U.S. companies go abroad, it takes jobs from the United States, the runaway plant story," Hufbauer said in a phone interview from Washington. "But the fact is, when companies go abroad, they expand faster at home, they're more profitable at home, they do more exports, more R&D."
But the argument in favor of reducing trade barriers to promote international commerce has been eclipsed in this election cycle by the arguments put forward by Trump and Sanders that U.S. workers have been overwhelmingly hurt by the North American Free Trade Agreement, which went into effect in 1994, and two decades of loosening tariffs with China.
"Trump and Sanders are twins on trade policy, except Sanders doesn't shout as loud," Hufbauer said.
Trump has said that he would seek to reduce the strength of the dollar, thereby giving corporations less of an incentive to move or open factories outside the U.S.
According to the liberal Economic Policy Institute, the U.S. trade deficit with TPP countries has meant the loss in 2015 alone of two million jobs. Much of those losses, said the EPI's Robert Scott, were due to using currency manipulation to take advantage of removed barriers.
To create jobs in the U.S., Trump has said he'll tax companies that locate operations to Mexico, and has all but promised a trade war with China. Trump has infamusly pledged to build a wall along 1,000 miles of the U.S.-Mexico border, a move that Hufbauer says would lead to protectionism, harkening back to years when political relations between the countries were hostile and Mexico's economy was largely closed.
In a stark contract with elections past, none of the leading presidential candidates have given full-throated support to trade treaties generally, or more generally to the TPP. Florida senator Marco Rubio, who has been fading in the polls, and Jeb Bush, have been its biggest backers while Ohio Governor John Kasich has withheld support, raising questions about protecting U.S. jobs. Texas senator Ted Cruz does not support the TPP.
The muted support for TPP has been heartening for Thea Lee, the AFL-CIO's deputy chief of staff.
"Why is the elite opinion about trade policy so different from grassroots people who are living this every day?" Lee said in a Tuesday conference call with reporters.
Clinton, who helped to build support for the TPP as secretary of state under Obama, has tempered her enthusiasm for the agreement since announcing her candidacy. As the administration's point person on foreign policy, Clinton viewed the TPP as a positive for geo-strategic reasons in addition to economic ones.
Yet rather than offer even a general argument in favor of open markets, Clinton's campaign has emphasized her plans to create jobs through investment and tax reflief. There's no heading for Clinton's specific position on trade in the "Issues" section of her website.
But Clinton's history of support for TPP may have cost her votes in Michigan, and could do the same this coming Tuesday in Ohio, Illinois and Missouri. That's given Sanders room to appeal to working-class voters that have seen their wages stagnate or their jobs move overseas.
The direction of the conversation depresses Hufbauer. "Limiting the ability of U.S. companies to operate overseas isn't good for the economy," he said.