How to protect US free trade victims - ING

According to Raoul Leering, Head of International Trade Analysis at ING, US workers would be better off if Trump adopted European-style labour policies instead of unleashing a trade war against China and criticising European trade policies.

Key Quotes

“There is still a chance that President Trump will impose steel and aluminium tariffs on the EU. The EU is exempted for the time being, but there is no reason to suppose that Trump's dissatisfaction with the American trade deficit with the EU has suddenly disappeared. Germany, in particular, has been accused of unfair trade policies by the US president. So it is far from unthinkable that Trump will return to pressure Germany and, in general, the EU to lower its trade surplus with the United States.”

“Higher tariffs for US imports of European products will continue to be the obvious stick to get that done. If Trump were to apply tariffs and the EU retaliated in kind, a full-blown trade war would not be out of the question.”

“A tit-for-tat battle would lead to serious economic damage on both sides of the ocean.”

“So if tariffs will not save or create a significant number of jobs in the rust belt, what could help?”

“Trump should arm US workers by investing in their employability, instead of taking up arms with their trade partners. EU countries have proven there is a better way of dealing with the negative side effects of trade liberalisation. Research by David Author shows that Americans who lose their job because of competition from China are not very successful at finding a position of equal pay elsewhere. Many of them end up unemployed or withdraw completely from the labour market, often through disability schemes. Those who do find a new job, often have to accept lower pay and worse pension schemes than in their previous jobs.”