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The Economic Consequences of Mr Trump

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  • Max Corden
  • Ross Garnaut

Abstract

The Trump administration has embarked upon two large economic policy initiatives at a time of full employment: increasing the budget deficit by cutting personal and corporate tax rates; and increasing protection, especially against countries with which the United States has bilateral trade deficits. These initiatives are meant to reduce trade deficits and increase employment and incomes in the US manufacturing sector. Economic analysis tells us that the result will be larger trade deficits, and weaker total tradeables, including manufacturing employment. There may or may not be a net gain for employment and incomes in those industries which have been the greatest beneficiaries of protection. Trump's protection policies will damage incomes in the United States and the rest of the world; the damage will be greater if other countries retaliate or emulate. Alternative policies that compensate losers from free trade would give better results.

Suggested Citation

  • Max Corden & Ross Garnaut, 2018. "The Economic Consequences of Mr Trump," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 51(3), pages 411-417, September.
    • Handle: RePEc:bla:ausecr:v:51:y:2018:i:3:p:411-417
    DOI: 10.1111/1467-8462.12295
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    Cited by:

    1. Zhuo Chen & Bo Yan, 2022. "The impact of trade policy on soybean futures in China," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(4), pages 1152-1163, June.
    2. Zuo, Shengqiang & Wu, Bangzheng & Feng, Jun, 2023. "Does government reduction of the corporate income tax rate increase employment? Evidence from China," International Review of Economics & Finance, Elsevier, vol. 83(C), pages 365-372.

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