But how, then, should we make sense of a seismic event that took place a few weeks ago — with almost no discussion in the United States? On Nov. 15, in a virtual ceremony, 15 Asia-Pacific countries signed the world’s largest free-trade pact, the Regional Comprehensive Economic Partnership (RCEP). The signatory states account for 30 percent of global GDP — larger than NAFTA or the European Union. Many of the same nations had also signed, two years earlier, another big free-trade pact called the Trans-Pacific Partnership (TPP), which also included Canada, Mexico, Chile and Peru. And negotiations are underway to conclude a China-Japan-South Korea trade agreement as well as a China-E.U. investment treaty. And in 2018, African nations formed a continent-wide free-trade area.
The United States had spearheaded the TPP, but Trump withdrew the United States and sat idly by while the rest of the Asia-Pacific region barreled ahead with integration. Far from “pivoting to Asia,” as Barack Obama called for, America has turned inward.
That, of course, is entirely in keeping with Trump’s professed strategy of economic nationalism, a core component of his worldview. He campaigned for the presidency vowing to address what he saw as the scandal of the U.S. trade deficit, which to him was the greatest symbol of the country’s disastrous policies. His trade adviser, Peter Navarro, predicted that the deficit would be eliminated within a few years of Trump taking office. In fact, under Trump, the trade deficit has gone up. It is now on track to reach its highest level in 12 years.
By any measure, Trump’s trade policies have failed. He promised to bring manufacturing jobs roaring back. In fact, the percentage of jobs in manufacturing has stayed roughly the same since he came into office. He claimed that foreign countries such as China and Mexico would pay for his tariffs. In fact, studies show that American consumers have footed most of the bill. He promised that China would buy many more American goods. In fact, China is importing less from the United States than it was in 2017.
What jobs have been preserved have come at a staggering cost. For every job saved in the steel industry, for example, U.S. businesses and consumers have had to pay $900,000. Farmers’ incomes have been sustained only because of massive subsidies to them — tens of billions of dollars — to compensate for their lost markets in China. Were Trump to have “saved” more American jobs, he would have bankrupted the country.
The pandemic, far from making the case for onshoring, actually shows its dangers. When covid-19 hit, countries around the world faced severe shortages of vital items, from masks to cotton swabs. Thanks to foreign producers, most of these demands were met within a few weeks or months. (There is now a global glut of masks, and prices have plummeted.) The vaccine race is a massive global endeavor, involving scientists, technicians and manufacturing facilities fanned across the world. It would be inconceivable to develop and produce billions of vaccine doses without global supply chains.
Some have suggested in the face of this pandemic that the United States should onshore production of key medical equipment and supplies. But how do we know which ones to prioritize? Will the next global crisis be the same as the last one? What if the future catastrophe comes in the form of a non-airborne disease — or a tsunami? We would have subsidized huge industries only to find that we were fighting the last war. It makes sense to maintain some strategic reserves of medical supplies. It is also wise to ensure that the United States is not totally dependent for any key product on one country, especially China. But taking cautionary measures like these hardly spells the end of globalization.
The abject failure of Trump’s trade wars does not seem to have registered in Washington, where Democrats and Republicans alike seem to want to continue his approach, just more intelligently than he did. In a smart essay in Foreign Affairs, Shannon O’Neil points to what the real answer may be. “Rather than too much free trade, the United States has too little: U.S. companies have preferential access to less than ten percent of the world’s consumers. Mexico and Canada, in contrast, maintain such access to over 50 percent of global markets.”
The United States is now virtually the only country in the advanced industrial world following a protectionist path. Most other countries understand that the best way to raise incomes at home is to expand markets abroad, buying and selling from the rest of the world. The United States has 4 percent of the world’s population. It needs to trade with the other 96 percent if it wants to improve its citizens’ lives.