How harmful is Trump's protectionism?

President Trump stressed in his inauguration speech that he wants to protect the US from foreign economic interests. One of his first acts as president was to sign an executive order on exiting the transpacific free trade agreement TPP. Protectionism didn't work during the Great Depression either, journalists point out, and lament the end of the era of global trading.

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Lietuvos žinios (LT) /

Nothing learend from past mistakes

The US government resorted to protectionism to counter the Great Depression that began in 1929 - with fatal consequences, Swedbank economist Laura Galdikienė points out in Lietuvos žinios:

“By 1933, just a few years after the start of the Great Depression, global trade had already shrunk by two thirds. That slowed recovery and further exacerbated the global economic crisis. Protectionism pulled the global economy down like a heavy stone in water. Now, by the looks of things, humanity is repeating its mistakes. After more than two decades of accelerated trade liberalisation the spectre of protectionism has once again reared its ugly head. It controls politics and threatens to terminate the current global trade order, spark destructive trade wars and endanger the fragile global economic recovery.”

The Economist (GB) /

Jobs won't come back

The era of globally active companies is coming to an end, The Economist observes, and laments the consequences:

“The golden age of global firms has also been a golden age for consumer choice and efficiency. Its demise may make the world seem fairer. But the retreat of the multinational cannot bring back all the jobs that the likes of Mr Trump promise. And it will mean rising prices, diminishing competition and slowing innovation. In time, millions of small firms trading across borders could replace big firms as transmitters of ideas and capital. But their weight is tiny. People may yet look back on the era when global firms ruled the business world, and regret its passing.”

Il Sole 24 Ore (IT) /

Bilateral agreements as bait for London

British Prime Minister Theresa May will be the first foreign head of government to visit the new president in Washington. This marks the start of a new era of bilateral trade agreements, Il Sole 24 Ore predicts:

“With May Trump will not only talk about common political interests and the special relations between Washington and London but also initiate talks aimed at establishing a free trade zone between the two states. … The repercussions and uncertainty resulting from the US's change of course won't be negligible by any standards - either for Europe or for Asia and America. At the political level Europe will come under pressure from those who are pushing for a way out from the binding agreements with Brussels. … The UK is likely to compensate for the damage it suffers by exiting the single market through comprehensive agreements with the US.”

China Daily (CN) /

US only hurting itself with protectionism

A trade war with China would give US companies less incentive to innovate and exclude them from a huge market, China Daily warns:

“If heavy protection is required for US manufacturers to make the same goods as can be made equally well in China or in Mexico, then it will hurt, rather than benefit, the competitiveness of the US economy. A temporary protection may be needed, admittedly, for workers to swap jobs and companies to turn out new products. But long term, it is a dose of poison for entrepreneurship. ... A trade war will also backfire because it will turn away potential customers in a country with a population of 1.3 billion. Many international brands have benefited from their sales to China. It would be foolish to deny US brands the opportunity to do the same.”