Donald Trump’s presidency is marked with a number of contradictory policies, some of which concern trade. The most distinctive feature of his trade policy is protectionism, ensured by imposing tariffs on imports. While some Americans believe that this measure will benefit the USA, others assume that it will do only harm and decrease the country’s competitiveness. This paper will analyze whether Trump’s trade policies have increased the competitiveness of the USA.
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Donald Trump became president at a time when the USA was an economically prosperous country. The unemployment rate was low; the economic output was growing slowly, as well as manufacturing employment (Kliesen and Tatom, 2018). However, imposing trade restrictions have hindered the US economic development since these measures “work to reduce long-term growth through reduced productivity” (Kliesen and Tatom, 2018, p. 120). Thus, Trump’s trade policies may be called “counterproductive” since limiting imports causes the price increase in domestic production, making the US manufacturing less competitive (Sheng, H. Zhao, and J. Zhao, 2019, p. 11).
Eichengreen (2018, p. 3) supports this point, applying it to any imported “intermediate goods and capital equipment” since taxing them leads to a decrease in competitiveness. Carbaugh (2019) explains this by the example of the automotive industry. The researcher argues that imposing tariffs on imported steel increases the demand for American steel, which leads to higher costs of this raw material for the car industry, making it less competitive in international markets (Carbaugh, 2019). Thus, Donald Trump has failed to develop effective trade policies, which would enable the country to withstand international trade rivalry.
In conclusion, Trump’s administration has made a mistake by imposing tariffs on imports, which has led to the trade war. Since these actions cause rising prices of domestic products, the competitiveness of the USA is weakened. It leads to the reduction of the purchasing ability of the Americans, as well as the inhibition of economic growth. Probably, it is the result of the president’s economic incompetence.
Carbaugh, B. (2019) ‘Trump’s America first program: a flawed approach’, Challenge, 62(2), pp. 114-162.
Eichengreen, B. (2018) ‘Are Trump’s trade policies fit for purpose?’, Capitalism and Society, 13(2), pp. 1-6.
Kliesen, K. L. and Tatom, J. A. (2018) ‘Is American manufacturing in decline?’, Business Economics, 53(3), pp. 107-123.
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Sheng, L., Zhao, H. and Zhao, J. (2019) ‘Why will Trump lose the trade war?’, China Economic Journal, 12(2), pp. 137-159.