USA TODAY International Edition
Trump’s trade policy may stunt growth
Protectionist ideals could hurt global progress, report says
Protectionist trade policies such as those advocated by President Trump threaten to help derail a projected slight increase in global economic growth, the Organization for Economic Cooperation and Development warned in its latest economic outlook report.
Global GDP is forecast to rise to 3.5% in 2018 from 3% in 2016, the OECD, an intergovernmental organization based in Paris, said in its report Tuesday. For the United States, GDP is expected to reach 2.8% in 2018, up from 1.6% in 2016 amid rising confidence.
The forecast is mostly unchanged since November 2016. However, the OECD cautioned that consumption, investment, trade and productivity were all far from strong and that growth rates remained sluggish by past standards, sitting below a historical 4% average.
“Disconnects, volatility, financial vulnerabilities and policy uncertainty could derail the projected modest pick- up in growth,” the organization said. “While immediate indicators of financial market stress have generally moderated compared with a year ago, underlying tensions have continued to rise.”
Along with the possibility of different interest rates among the world’s major advanced economies and the political uncertainty caused by looming elections in Europe, the OECD identified “significant uncertainty about the future direction of trade policy globally” as a potential barrier to improved growth.
“Efforts are needed to strengthen domestic policies that support trade openness, maximize the gains from trade and ensure that the benefits are fairly shared, with obstacles to the process of reallocation and transition for workers reduced,” the OECD said. “An increase in trade barriers in the major global trading economies — Europe, the United States and China — would have a major adverse impact on trade and GDP, particularly for those economies that imposed new trade barriers.”
Trump has consistently said his priority is to protect American jobs and has promised to renegotiate the North American Free Trade Agreement with Canada and Mexico. He has already signed an executive order that formally withdraws the United States from the TransPacific Partnership, a 12- nation trade deal negotiated by former president Barack Obama.
The White House’s formal trade policy agenda says that in “too many instances, Americans have been put an an unfair disadvantage in global markets. Under these circumstances, it is time for a new trade policy that defends American sovereignty, enforces U. S. trade laws, uses American leverage to open markets abroad, and negotiates new trade agreements that are fairer and more effective both for the U. S. and for the world.”