The great threat to middle class jobs and wages today is not trade but automation, and the solution is not protectionism, says former Obama trade negotiator Michael Froman.
“Most economists will tell you that 80% or more of the effect on jobs is from technology, not from trade,” Froman told David Axelrod on “The Axe Files,” a podcast from the University of Chicago Institute of Politics and CNN.
“We need to have a much more holistic view in terms of both preparing people with the skills that they’re going to need to succeed in a rapidly changing economy, and helping those who are adversely affected by change,” he said. “We don’t do a particularly good job of that.”
But Froman, the former US Trade Representative, says that by withdrawing from trade agreements and threatening to impose tariffs, President Donald Trump is hurting the American workers he intends to protect.
During the presidential campaign, Trump said he would impose tariffs on imports from China and Mexico, as well as on American companies who move their operations overseas and then re-sell their products in the US.
Pointing to the 11.5 million US workers whose jobs depend on exports, Froman said that America risks retaliation if it slaps tariffs on other countries for short-term economic gain. If that happens, Froman says, “our workers are the ones who are going to be hurt.”
Froman, who led the US negotiations for the multilateral Trans-Pacific Partnership trade deal that Trump rejected soon after taking office, said the President’s decision to relinquish a vital economic region to the Chinese will have long-term consequences for America — and belies Trump’s promise to be aggressive with China.
“It’s hard to be tough on China and withdraw from TPP in the same breath,” Froman said, while also explaining how China is now poised to reap the benefits of our absence in the Asia-Pacific region by implementing their own trade agreement with weaker labor and environmental protections than what was in TPP.
Economists have estimated that TPP would add $130 billion to GDP in the US, and would mean an additional $350 billion in US exports. By surrendering those opportunities, Froman said, “we’re already losing market share” in the region.
“We could actually be making life more difficult for our workers and our farmers,” Froman added. “If we can’t export, we can’t support jobs here at home.”
To hear the whole conversation with Froman, click on http://podcast.cnn.com. To get “The Axe Files” podcast every week, subscribe at http://itunes.com/theaxefiles.