Launching trade wars will lead to job losses, not job creation

THERE is general agreement that one of the major driving forces behind the rising populist tide in the industrialised nations has been the growing perception among voters that trade competition from China and other emerging economies is responsible for the decline in the manufacturing sectors and the resultant unemployment and stagnant wages among blue-collar workers.

Indeed, the case against the continuing liberalisation of global trade has been central to the US presidential campaigns of Republican frontrunner Donald Trump and that of Democratic Vermont senator Bernie Sanders. Both have blamed the free trade policies pursued by Republican and Democratic presidents for what they describe as the devastation of the American workforce and have pledged to pursue trade restrictions to bring manufacturing jobs back to America.

While in the past bashing free trade was regarded as nothing more than election campaign rhetoric, this time it seems that scapegoating it for lost jobs and low working-class wages is gaining wider support among voters who buy into the campaign promises to restore economic prosperity by punishing trade partners.