Hello everyone, as you all know the 2016 Presidential Election was last night, resulting in Donald Trump as the new U.S. President. I don’t usually post about politics but I felt as a Political Science major, this is something I wanted to discuss, as last night’s election will truly be a transformative historical event. Instead of focusing on the overly-discussed wall, and Trump’s ridiculous claims about women and people of various races that aren’t his own, I wanted to instead focus on his economic approaches, and how detrimental his protectionist attitudes really can potentially be both for America and for the entirety of the global markets.
It is important to state from the beginning, that no one really knows what will happen with Trump as president. In the post-depression era there really hasn’t been any U.S. Presidents that have adopted a protectionist approach to economics to the level that Trump has, but it’s in my view, that this could be more of an obstacle as a opposed to the goal of stimulating growth and creating more jobs, and here’s why.
Neoliberalism and free-trade, regardless of your position on its benefits to the world, has significantly contributed to globalization. Trump has made it clear that he has a mission of reversing the process globalization, he will do this by reducing funds to instrumental organizations including NATO, and even renegotiating NAFTA or eliminating this free-trade deal all together.
Here’s what we know about free trade based upon comparative advantage theory (introduced by Adam Smith):
- When trade is free, the capital flows to the industries in which a country specializes in, or where that country has the comparative advantage in relation to other countries.
- When the above occurs, global production increases
- free trade is not ideal for every single industry in every single country
Interestingly, though Donald Trump has taken a vocal strong stance against globalization, it seems that he has greatly benefited from it as it can be noted that he has international businesses all around the world, despite the fact that he denounces globalism.
By Trump taking protectionist approaches to economics and ultimately politics, he is essentially closing off the States from other nations globally in order to “strengthen” the country by taking a strong focus on the internal affairs of the nation such as enhancing defence etc.. However, it can be noted that protectionism is often implemented in nations that are still developing and industrializing. Therefore, it will be quite interesting to see how the world hegemon and perhaps the most influential global actor in international relations, will perform under these new protectionist policies.
It is in my view, that these protectionist approaches implemented in America, will act as an obstacle for Trump living up to his promises to create new jobs, and to stimulate the U.S. economy and will also fail in achieving growth. Taking a step back from globalization as the world’s dominating financial market, could have potentially detrimental effects on both global stability and the world economy. New macroeconomic problems could occur, and this has the potential to reshape the relations between the U.S. and the rest of the world. In my perspective, Trump is fundamentally reversing much of what previous U.S. Presidents have successfully achieved.
Despite whether or not you agree with Donald Trump or his views on globalization, it is inevitable. But I must say, now is quite an interesting time to be a political science student, studying history in the making.
What do you think? Will Trump’s protectionist approaches be beneficial to the U.S. and macroeconomics as a whole, or will his attempt at reversal of globalization end negatively?