In November’s issue of Reason magazine, Veronique de Rugy tackles the anti-trade sentiment sweeping the country this election. No, Americans aren’t currently the losers in trade deals with other countries:
Unfortunately, Trump, like many before him, fails to see the beauty of low-cost, high-quality imports. According to the candidate, cheap goods destroy American jobs. This is why he wants to impose high tariffs on foreign products, forcing domestic consumers to “buy American” even if prices are substantially more.
But the logic that fewer imports will keep Americans employed is false. If there is a single issue where economists of all political orientations are in agreement, it is that international trade doesn’t destroy jobs on net. Freer trade does rearrange jobs from countries where industries are relatively inefficient to countries where they get a better bang for the buyer’s buck. But this process makes workers more productive and increases wages as a result. As Krugman put it, “trade policy should be debated in terms of its impact on efficiency, not in terms of phony numbers about jobs created or lost.”
Hoover’s Cochrane adds that if you follow the money, you can see every dollar Americans spend on imports coming back to the U.S. “When a Chinese company sells a product in America,” he says, “we send money to China. The Chinese do not sit on the money. They use a lot of it to quickly turn around and buy buy American” stuff. And even if they don’t buy from us, the countries they do buy from often turn around and use their new money to purchase American goods, assets, or government debt.