Donald Trump wants to launch another trade war.
Great politics, terrible policy.
This column, written in the spring of 2015, explored something the 45th president probably has yet to hear of: foreign direct investment.
Enjoy!
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Bad news for Bernie Sanders and Donald Trump: Americans are lurching back to rationality on trade.
Multiple polls show that with the Great Recession behind us, globalization is regaining popularity. The freshest evidence arrived via a Pew Research Center survey. In mid-May, the organization found that 43 percent of respondents held a “positive view of the financial impact of free trade agreements, up 17 points since 2010.” In a red vs. blue who’d-have-thunk-it, more Democrats thought tariff-lowering pacts “have been good for the U.S.” than Republicans. Two likely causes? “Younger adults” (those under 30) are “particularly likely to view free trade agreements positively,” as are Latinos.
In late April, NBC News and The Wall Street Journal asked: “In general, do you think that free trade between the United States and foreign countries has helped the United States, has hurt the United States, or has not made much of a difference either way?” Thirty-seven percent picked “helped.” The Journal’s Siobhan Hughes called the result “a turning point: it marks the first time in more than 15 years that a plurality of Americans said that free trade helped. The last time Americans had more positive than negative views of trade was in December 1999, when 39 percent of respondents said that free trade agreements benefited the country and 30 percent who said the deals hurt.”
Gallup’s February trade poll supplied encouraging results, too. Asked to choose between “foreign trade as an opportunity for economic growth through increased U.S. exports” or “a threat to the economy from foreign imports,” 58 percent chose the former.
However promising, the survey findings are somewhat puzzling, given the powerful forces working overtime to denigrate free trade. Unions, the environmental left, countless pundits, populist pols left and right — lots of people make their livings assaulting the notion of capitalism on a planetary scale.
But free trade has a secret weapon: foreign direct investment (FDI).
“The United States is home to more [FDI] than any other country in the world,” according to the U.S. Department of Commerce’s Vinai Thummalapally, “with a total stock valued at $2.8 trillion as of 2013, approximately 18 percent of U.S. gross domestic product. FDI flows into the United States are robust, totaling nearly $231 billion in 2013, up from $170 billion in 2012.”
May’s marquee FDI came courtesy of Volvo. The Swedish automaker will build “its first [factory] in the United States since entering the market 60 years ago,” The New York Times reported. Initial production is planned for 2018, and in time, 4,000 South Carolinians could be hired.
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