Trump’s Actions Could Undermine a Thriving Global Economy

Given the outcomes, the United States should be the last nation eager to reshape the global economy.

We have flourished in recent years, whereas other advanced democracies have struggled to keep pace.

If we’ve truly been “taken advantage of,” as President Donald Trump and his trade war supporters claim, it appears the so-called culprits have gained little, while we continue to advance.

This doesn’t imply that we shouldn’t aim to rectify unjust trade practices and seek greater autonomy from Chinese supply chains.

However, it is unwise to recklessly disrupt a system where we stand at the top, growing stronger instead of weaker.

Since the early 1990s, we have been outpacing the other advanced nations.

As noted in a cover story by The Economist last year, “In 1990, America represented roughly two-fifths of the total GDP of the G7 nations; today, that figure is about half.”

During these decades, we have essentially doubled the output gap per person compared to Europe and Japan.

Since 2020, we’ve expanded at three times the rate of the G7. Overall, while our share of global GDP was 21% in 2012, it has risen to 26% — roughly the same level we held in 1980.

Our labor productivity has surged in comparison to other developed nations, and we invest more in R&D as a percentage of GDP than all but South Korea and Israel.

Countries that once seemed to have mastered a powerful mercantilist strategy compared to our free market have stagnated.

Germany, which was once hailed as a beacon of industrial policy, has not seen GDP growth since 2019, and its manufacturing sector has been in decline for years.

Japan, once regarded with fear and admiration for its industrial strategies, has endured more than three decades of low economic growth.

Canada was also viewed as a viable model; its per capita national income was once 80% of ours, but it now stands at about 70%.

Despite predictions of overtaking the United States, China has actually lost ground in recent years, with per capita output still less than a third of ours.

According to The Economist, “Average wages in America’s poorest state, Mississippi, surpass the averages in Britain, Canada, and Germany.”

Hasn’t our manufacturing sector suffered great harm?

As the Financial Times points out, our manufacturing output has actually increased since 1990.

We are producing fewer items, but we are focusing on higher-end goods, such as technology and aerospace, instead of shoes and textiles.

The publication highlights that the United States excels in manufacturing output per worker compared to the world.

Although we’ve lost 5 million manufacturing jobs since 1990, we’ve gained nearly 12 million in services and over 3 million in transportation and logistics.

The objective of the Trump tariffs is to boost employment in one sector at the expense of the overall economy, which is inherently a poor bargain.

These tariffs are broadly applied and poorly constructed to achieve even this specific aim, given that the cost of materials like steel and aluminum will rise for manufacturers.

Estimates suggest that Trump’s tariffs on steel and aluminum during his first term resulted in about 75,000 fewer manufacturing jobs due to these exact reasons.

The natural inclination is to alter the rules when you’re losing, not when you are leading in a race.

Economic shock therapy is what struggling nations attempt, such as Russia under Boris Yeltsin, former Eastern Bloc countries, or Bolivia in the 1980s.

In this case, Trump is attempting to use a defibrillator on a patient who not only passed the stress test with exceptional results but is also winning the sprint.

Trump has expressed a willingness to embrace “a little disturbance” with his new tariff approach.

The concern is that we will simply experience slower economic growth than we otherwise would have — since the president isn’t addressing an economic disaster, but altering a winning strategy.

Twitter: @RichLowry