Free trade makes dollars and sense
On the Democratic side, Vermont Sen. Bernie Sanders has condemned free trade agreements such as NAFTA for not including adequate protections for workers and the environment. Meanwhile, other candidates, including those who traditionally have been supportive of free trade, have been somewhat muted on the subject.
Based on the common media narrative, one gets the impression that the American public is in the midst of some kind of populist anti-trade revolt. Yet polling tells a different story. According to Gallup, the percentage of Americans who view foreign trade as an opportunity for economic growth has risen from 46 percent in 2012 to 58 percent today, while the percentage viewing foreign imports as a threat to the economy has fallen from 46 percent to 34 percent.
The same trend is apparent for lower-skilled workers, those supposedly more at-risk from foreign competition. A majority (52 percent) of Americans with a high school education or less view foreign trade mainly as an economic opportunity today, up from 37 percent four years ago.
The benefits of trade are particularly stark in Texas. According to the U.S. Commerce Department, Texas has been the top exporting state for the past 14 consecutive years, with $250 billion in exports in 2015 alone. Nearly 12 million U.S. jobs are supported by trade, including more than 1 million supported by Texas exports. On average, trade-supported jobs pay 18 percent more than other jobs.
Far from being a threat, trade is something Texans should want more of. With recent expansions to the Panama Canal, Texas has an opportunity to boost our economy through increased trade with Asia. But Texas-made goods are still subject to a host of tariffs and restrictions that leave us poorer than we should be. Current tariffs on U.S. exports reduce manufacturing wages by as much as 12 percent, according to the Office of the U.S. Trade Representative.
Pending trade agreements like the Trans Pacific Partnership are a key way to remove this hidden tax on American workers. The TPP would eliminate more than 18,000 existing taxes on American made products. No trade deal is perfect, but for a state like Texas approving the TPP really ought to be an easy choice.
Attempts to limit trade are the economic equivalent of cutting off your nose to spite someone else’s face. A good example of the folly of protectionism, detailed in a report from the Peterson Institute for International Economic, is the 35 percent tariff President Barack Obama imposed on Chinese tires in September 2009. An attempt to protect American tire manufacturers, these tariffs ended up saving around 1,200 American manufacturing jobs at the cost of a whopping $900,000 per job. At the same time, higher tire prices led to a decline in the retail market for tires, costing more than 2,500 jobs. China also retaliated by imposing its own tariffs on U.S. exports of chicken parts, costing the U.S. economy an additional $1 billion.
Unsurprisingly, then, a recent poll of economists from across the political spectrum found that 95 percent thought free trade was a net benefit to the economy. Instead of putting up barriers to trade with other nations, the United States should be working to remove existing barriers, so that our state and our nation can live up to its true economic potential.