Trade Recovery Needs Sound Policy

By at 8 February, 2022, 9:56 pm

by Raymond J. Keating – 

The latest report on international trade in goods and serves from the U.S. Bureau of Economic Analysis showed that both U.S. exports and imports grew solidly in December, as well as in the full fourth quarter of 2021.

That lines up with the latest report on GDP, which pointed to a big jump in exports and imports in the final quarter of last year.

As we wrote before, “Trade has been devastated before and during this pandemic, so life on this front is a plus. Keep in mind, that real U.S. exports, even after this nice jump in the fourth quarter, remain below their pre-pandemic levels.”

Trade Critical to Growth

Trade stands as a vital source of U.S. economic growth, and part of the reason that the U.S. economy has under-performed for the past decade-and-a-half is due to trade underperforming for a good portion of that time. For example, from 2012 to 2021, real U.S. exports barely inched up by 4.2 percent, while real GDP grew by 19.5 percent over that same period.

It also is no coincidence that the U.S. has abandoned the vital leadership role on trade that it played from the end of World War II through the administration of President George W. Bush. President Obama largely was uninterested in trade, until the latter part of his presidency. President Trump was openly protectionist, and President Biden has largely continued Trump’s anti-trade policies.

Consider what Bryan Riley, director of the National Taxpayers Union’s Free Trade Initiative, recently told Forbes:

“It would be a pleasant surprise if the Biden administration began to remove protectionist policies instituted during the Trump administration. Last year, President Biden maintained the Trump administration’s ineffective tariffs on imports from China, modified instead of eliminating restrictions on steel and aluminum imported from allies, and watched from the sidelines as other countries lined up to join the Trans-Pacific Partnership. That’s a slow start, to say the least… The Biden administration is likely to keep trade policy on the back burner.”

If we are serious about economic recovery and expansion, of course, that is not acceptable. We need trade to be part of a pro-growth agenda. This agenda must work to reduce governmental obstacles to trade, such as reducing or eliminating tariffs, quotas and subsidies. Get trade policy right – that is, implement free trade agreements – and U.S. consumers, entrepreneurs, businesses and workers will benefit.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.


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