What if Donald Trump actually won the election? What would happen with trade and the economy?
Here is part one, all nice and pretty with photos, part two will come tomorrow. Zoellick suggests that if Trump abrogated various trade deals, the legal default would be a return to…Smoot-Hawley! As former USTR, he should know. Anyway, here is one part of the dialogue:
Cowen: I expect a somewhat slightly more optimistic scenario. I think a President Trump would give us a reality-TV version of a tariff hike. I don’t necessarily think he wants to experience the pain of tariffs going up, markets crashing and all the political fallout early in his time in office.
Yet he’s promised he would do something and he loves to spar with people and claim he’s being done wrong and rail against elites rather than own problems and solve them. So I think what he would probably do is announce that he had abrogated these treaties, not actually do it. There would be a very high level of uncertainty but I don’t think the laws on the books would necessarily change.
The biggest thing at stake here is uncertainty. Under all of these scenarios, the real impact would be on services, which often rely more on the regulatory system. Uncertainty would result in a higher implicit tax on exports of services to the U.S. than on exports of goods.
Zoellick: I think that’s an extremely optimistic interpretation. Remember, he has the authority to act. He can raise tariffs and create havoc.
I agree on your uncertainty point, but I think you may be a little blithe about the risk to markets. Other countries aren’t just going to stand for the U.S.’s blustering.
This is serious stuff. I worked on German unification. I’ve done a bunch of trade deals. I’ve had some experience internationally. If you act the way Trump talks you’re going to pull down a 70-year-old system that got us out of the Great Depression and helped the U.S. become the strongest economy in the world. This isn’t for fooling around with.
Here is the full, raw text with no formatting. Eleven full pages, that is for me the best version! There are many, many points of interest, I really liked this exchange.