A bad trade [in Trump’s view] deal allows U.S. manufacturing companies to lower their production costs by importing capital machinery, raw materials and intermediate inputs such as steel at global prices. A good trade deal protects the domestic U.S. steel industry and its 150,000 workers by raising the costs of production for steel-using manufacturing companies that employ 6.5 million U.S. workers.
A bad trade deal lowers or eliminates tariffs on the imported food, clothing and shoes that make up a disproportionately larger share of the family budgets of working class Americans and the 45 million Americans living below the poverty line, thus allowing their real wages and standard of living to rise.
A good deal protects the few hundred thousand remaining manufacturing jobs in the U.S. textile, apparel and footwear industries by maintaining a regressive tax of duties on food, clothing and footwear that imposes an effective tariff on the poorest 10% of Americans that is 5 times higher than the effective tariff on goods purchased by the richest 10%.
Washington Post columnist Robert Samuelson reflects on Bruce Sacerdote’s new paper that casts doubt on the claim that the American middle-class has stagnated economically for the past several decades . A slice:
These increases [in ordinary Americans’ consumption] can be reconciled with stagnant “real” wages, Sacerdote argues, because real wages weren’t stagnant. Inflation was overstated, meaning that real wages — their purchasing power — were understated. That’s the third source of his evidence. Although the difference is tiny in any one year, the cumulative effect is large. Sacerdote’s estimates imply hourly wages in 2015 roughly 25 percent to 50 percent higher than in 1975.
And here’s Scott Sumner on Sacerdote’s paper . A slice:
Last week I purchased a one-year-old Nissan Maxima SL (with 6600 miles) for $26,350, and was stunned by how much cars had changed since I bought my last car (a one-year-old Altima, in 2008.) I recall reading that (in the 1990s) Bill Gates used to drive a Lexus LS400. I would much prefer this 2016 Maxima to the car driven by the richest guy in the world, just a couple decades ago. The monthly payments are about $480, which means it’s within reach of tens of millions of Americans. There are an amazing number of safety innovations since I last bought a car.