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Trade Globalization and the US Economy

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The United States in the World Economy

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Abstract

This chapter examines the costs and benefits of trade integration for the US economy. The economic arguments in favor of trade liberalization are first reviewed in order to identify the particular assumptions and mechanisms by which it provides both benefits and costs for trading partners. The critical role of government policy in facilitating labor market adjustments for those workers adversely affected by trade developments is also discussed. Three case studies of important trade issues for the US economy are examined: (1) the economic impact of trade opening with China since the beginning of the current century; (2) the expected benefits of the Trans-Pacific Partnership, had it been adopted by the United States; and (3) the effects of NAFTA on domestic output and employment.

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Notes

  1. 1.

    The primary role of macroeconomic factors in determining trade imbalances has been demonstrated empirically for a broad sample of advanced and emerging market countries in a recent study by the International Monetary Fund (IMF 2019).

  2. 2.

    These conclusions are summarized in Huffbauer and Lu (October 2016) and (May 2017).

  3. 3.

    These results are reported in Acemoglu et al. (2016) and in Feenstra and Sasahara (2017).

  4. 4.

    These features of the government’s transfer programs are described in Autor et al. (2016).

  5. 5.

    The results reported in this paragraph are drawn from the study by Feenstra and Sasahara (2017).

  6. 6.

    A major study in this area has been carried out by Magyari (2017). Similar results have been reported by Caliendo et al. (2018).

  7. 7.

    These results were reported in Amiti et al. (2017).

  8. 8.

    This conclusion is based on Kehoe et al. (2018).

  9. 9.

    These issues are examined in a careful study by Houseman (2018).

  10. 10.

    One study that attempts to distinguish between the effects of foreign trade and technological change on manufacturing industries in the United States is Autor et al. (2015).

  11. 11.

    The data on workers covered by the trade adjustment assistance (TAA) during 2003–07 are drawn from a study by Collins (2014).

  12. 12.

    This study was conducted for the TAA by Mathematica Policy Research and Social Policy Research Associates, “Estimated Impacts under the Trade Adjustment Assistance (TAA) Program Under the 2002 Amendments” (2013), which is available at the research division of the US Department of Labor (wdr.doleta.gov/research).

  13. 13.

    These data are drawn from a study by the US government’s Council of Economic Advisors, “Active Labor Market Policies: Theory and Evidence for What Works” Council of Economic Advisors Issue Brief (December 2016), which can be accessed at www.whitehouse.gov/cea

  14. 14.

    The coverage and effectiveness of active labor market polices among OECD countries are examined in Nie and Struby (2011) and Martin (2014).

  15. 15.

    The participants in the TPP negotiations were Australia, Canada, Chile, Japan, Korea, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam and the United States.

  16. 16.

    For the identification of the six points of criticism raised during the presidential election campaign, as well as some of the responses, I have relied on Blackwill and Rappleye (2017).

  17. 17.

    The reference to 18,000 tariff items was cited in a White House press release of October 5, 2015; the projected level of exports was drawn from Petri and Plummer (2016).

  18. 18.

    This point is emphasized by Schott (2016).

  19. 19.

    According to the 2018 Economic Report of the President (US Council of Economic Advisors), recent estimates of the annual cost to American businesses arising from intellectual property theft range from US$227 billion to US$600 billion a year (pp. 251–2).

  20. 20.

    Rodrik (2018) has been a prominent spokesman for this point of view.

  21. 21.

    This conclusion is presented in the report of the US Department of the Treasury Office of International Affairs, “Report to Congress: Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States” (October 2016), which can be accessed at home.treasury.gov

  22. 22.

    The main points raised in this paragraph draw from Blackwill and Rappleye (2017).

  23. 23.

    These results were developed by Petri and Plummer (2016).

  24. 24.

    These provisions have been analyzed by a team of experts from the Peterson Institute for International Economics (2016).

  25. 25.

    The figures on job losses and gains are taken from Gary Huffbauer et al. (2014), page 6.

  26. 26.

    These results are reported in Slaughter (2018).

  27. 27.

    This estimate also appeared in Slaughter (2018).

  28. 28.

    One source for comparing the provisions of the United States, Mexico and Canada Agreement (USMCA ) with NAFTA is Huffbauer and Glberman (2018).

  29. 29.

    These and other adverse effects of the replacement of NAFTA with the USMCA agreement are presented in Mary Burfisher et al. (2019).

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Authors and Affiliations

  1. School of Advanced International Studies, Johns Hopkins University, Washington, DC, USA

    Anthony Elson

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Elson, A. (2019). Trade Globalization and the US Economy. In: The United States in the World Economy. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-20688-8_3

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  • DOI: https://doi.org/10.1007/978-3-030-20688-8_3

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  • Print ISBN: 978-3-030-20687-1

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