The Economic Consequences of Mr Trump

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...