Trump’s Protectionist Economy

Trump’s nomination had little to do with social issues. Yes, Donald Trump promised to ban Muslims from entering the country. Yes, Trump claimed a ruling on his for-profit scam university was biased because the deciding judge was Mexican. And yes, Trump probably still thinks that Barack Obama was born in Kenya. But none of that is why Trump won the Midwest. President-elect Trump won the Midwest because of his protectionist economic and trade policy. For the part of America that has been left behind by globalization and the economic recovery, Donald Trump’s policies offered hope.

Post-election exit polling supports this contention. According to CNN exit surveys, in Ohio, Iowa, Wisconsin, and Michigan, the economy was the most important issue to a majority of voters. And though Hillary Clinton did hold a narrow margin lead over Trump among these voters, her lead evaporated when trade came up. 48 percent of Ohioans and half of Wisconsinites felt that trade hampered U.S. jobs, and of these voters, two-thirds broke for Trump. Additionally, 54 percent of Wisconsinites, 52 percent of Ohioans, and 52 percent of Iowans agreed that Trump would handle the economy better than his opponent.

Exit polls are not the best way to predict who will win an election because their samples are not always random. But they still can help us understand how different demographics voted—and why they did.

Employment numbers in the Midwest are abysmal when compared to the rest of the US. According to the Center on Wisconsin Strategy, Wisconsin did not reach pre-recession employment levels until September 2015. But measured from before the Great Recession, the state’s growing working age population resulted in a job deficit of 102,060 by September 2015, which means that there were 102,060 fewer jobs available than Wisconsinites could find. In Ohio, the same holds true. Only 62.3 percent of Ohio adults are still in the labor market, and the state has not only seen a decrease in the number of jobs available but also in inflation-adjusted wages.

It is also important to look at the industries that represent Middle America. Alabama, Michigan, Iowa, Ohio, Kentucky, Wisconsin, North Carolina, Louisiana, Oregon, and Indiana are the 10 states that in 2012 relied the most on manufacturing for state GDP. According to the Federal Reserve Economic Data database, this is the quarterly percent change in manufacturing output in the United States since Q2 2012:

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The Fed collects this data every three months. To get the simple percent change in manufacturing output, we subtract the current quarter’s output from the previous quarter’s output and then divide that new quantity by the previous quarter’s output. The small changes seen here illustrates a stagnant sector; since 2015, the net change in manufacturing output is almost exactly zero. By contrast, manufacturing output increased around 2% during the economic expansions in the 1990s and 2000s. This decline in manufacturing is the main reason that nine of the ten states that most depend upon manufacturing voted for Trump, as he promised to put in place tariffs and other economic policies that would protect American manufacturing and save blue-collar jobs.

But Trump’s policies will not help manufacturing. Abandoning free trade agreements that have allowed the United States to remain an economic superpower will damage our GDP by raising the price of goods. The more expensive the product, the less of the good that is bought. Coupled with the deadweight loss that would ensue with a protectionist policy, the total amount spent on consumption as well as market efficiency would decrease. Consumption has made up at least 75 percent of U.S. GDP since 1960, and a decrease in GDP leads to recession. Just as our country climbs out of its last recession, Donald Trump’s protectionism will lead us back into one.

What Donald Trump sold Middle America was false hope. The manufacturing jobs that he promised to bring back can only be saved at a devastating cost, and that is a hard truth nobody wants to hear. Because of this false economic hope that Trump promised—and will fail to fulfill—Trump won the Midwest and the election. And because Trump won, we are now stuck with a man supporting protectionist policies that certainly will not make America great.

One thought on “Trump’s Protectionist Economy”

  1. Great analysis on economics. Protectionism will not only shrink America’s ability to continue playing a roll in the world’s growing economy but, it will decrease USA exports in technology and others. Protectionism will also increase the price for those goods that we can import at much lower rates from Eastern markets as well as South America.
    In short, we might loose employments in our exporting businesses and in addition pay more for clothing and other goods that are now being imported.

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