A Trump trade war won’t help working class backers

Paul Krugman

Donald Trump got within striking distance of the White House — or, more precisely, Comey-and-Putin range — thanks to overwhelming support from white working-class voters. These voters trusted his promise to bring back manufacturing jobs while disbelieving his much more credible promise to take away their health care. They have a rude shock coming.

But they are not alone in their gullibility: Corporate America is still in denial about the prospects for a global trade war, even though protectionism was a central theme of the Trump campaign.

Let’s talk means, motive and consequences.

You might imagine that a drastic change in U.S. trade policy would require congressional approval, but the relevant legislation gives the occupant of the White House remarkable leeway. He can restrict imports if such imports “threaten to impair the national security”; he can impose tariffs “to deal with large and serious United States balance-of-payments deficits”; he can modify tariff rates when foreign governments engage in “unjustifiable” policies.

Now, these provisions were not intended to empower a president to reverse decades of U.S. trade policy, or engage in personal vendettas. You can guess, however, how much such niceties are likely to bother the incoming administration. Which brings us to the question of motive.

Why would a Trump administration impose restrictions on imports? One answer is those working-class voters, whose supposed champion is set to pursue a radically antiworker domestic agenda. There is an obvious incentive for Trump to make a big show of doing something to fulfill campaign promises. And if this creates international conflict, that is actually a plus when it comes to diverting attention from collapsing health care and so on.

Beyond this, it is clear that the incoming commander in chief really believes that international trade is a game in which nice guys finish last. Furthermore, he is picking advisers who will confirm him in these beliefs.

So what will happen when the Trump tariffs come? There will be retaliation. And retaliation is not the whole story; there is also emulation. World trade will become a free-for-all.

Will this cause a global recession? Probably not — those risks are, I think, exaggerated.

What the coming trade war will do, however, is cause a lot of disruption. Today’s world econ- omy is built around “value chains”: your car or your phone contain components manufactured in many countries, then assembled or modified in many more. A trade war would force a drastic shortening of those chains, and quite a few U.S. manufacturing operations would end up being big losers.

An old joke tells of a motorist who runs over a pedestrian, then tries to fix the damage by backing up — and runs over the victim a second time. Well, the effects of the Trumpist trade war on U.S. workers will be a lot like that.

You might think that someone will persuade the incoming administration to rethink its commercial belligerence. That is, you might think that if you have paid no attention to the record and character of the protectionist in chief. Someone who will not take briefings on national security is not likely to sit still for lessons on international economics.

No, the best bet is that the trade war is coming. Buckle your seat belts.