About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

1 1 (February 19, 2019)

handle is hein.crs/govyem0001 and id is 1 raw text is: Congressional Research Service Informing the legislative debate since 1914 February 19, 2019 U.S. Trade Debates: The Case For and Against Trade Restrictions Background The 116th Congress is positioned for continuing oversight of the Trump Administration's evolving trade policy. Congress' role in trade policy stems from a number of overlapping responsibilities, beginning with Article I of the U.S. Constitution, which grants Congress the power to lay and collect taxes, duties, imposts, and excises and to regulate commerce with foreign nations. In some areas, particularly in tariffs and trade negotiations, Congress has delegated certain authorities to the President. Over the past year, the Trump Administration has made greater use of these authorities to impose tariffs on some U.S. imports and advocate for what it considers to be free, fair, and reciprocal trade. These developments have intensified congressional interest in trade policy and analysis of the impact of trade restrictions, including U.S. tariffs and their effects. Effects of Trade Liberalization Since World War II (WWII), the United States has been a driving force in removing trade barriers across the globe and constructing an open and rules-based global trading system through a wide range of international institutions and agreements. The effects of these efforts on the U.S. economy and the mechanisms by which trade has affected U.S. growth are difficult to quantify. This is partly due to the challenges associated with disentangling the effects of trade liberalization from those of other domestic and global economic developments. Nevertheless, most economists contend that in the aggregate the economic benefits of reducing restrictions to trade outweigh the costs. Reducing trade restrictions tends to lower prices and increase the variety of goods and services and provides U.S. firms with export opportunities. Studies show that U.S. firms engaged in trade often achieve greater productivity and pay higher wages and benefits to their workers. While the net payoff is substantial, the reality is that trade liberalization and globalization have presented both opportunities and challenges for the United States. Because the gains from trade tend to be more widely dispersed than the losses, they are often not readily apparent or well understood. Some groups argue that globalization has not been inclusive, benefiting some more than others. They point to job losses, stagnant wages, and rising inequality among some groups as indicators of the negative aspects of trade liberalization, although the causes of these trends are highly contested. The Trump Administration and some Members also contend that while past trade negotiations and agreements have lowered or eliminated U.S. trade restrictions, they have failed to address effectively foreign protectionist practices and enhance reciprocal market access for U.S. firms and workers. In their view, some countries play by different rules and conduct their economic and trade policies based on priorities that differ from-and often undermine-those of the United States. Additionally, while the impact of trade liberalization is multifaceted and in some cases disruptive, the growth of global value chains- combined with changes related to technology, labor productivity, consumer preferences, and broader economic factors-have also transformed some U.S. industries. Debates over Trade Restrictions Arguments for increased tariffs and other restrictions on trade come in several forms, but most are not compelling on economic grounds alone. Economists argue that protectionism imposes costs on the economy as a whole that exceed any potential benefits. These costs arise from implementation and enforcement, higher prices, inefficient resource allocation, and foreign retaliation. Three common arguments for trade restrictions are evaluated below. Figure I. U.S. Employment Trends Manufacturing Share of Total Private Total Private Employment Employment Isom 2070 110M 15 N 0% 70M Source: CRS with data from the U.S. Bureau of Labor Statistics. Trade Destroys jobs Some argue that trade restrictions are needed to save jobs. The economic reality is that jobs are constantly being created and replaced as some economic activities expand and others contract, and trade-like other market forces- contributes to this process. While some workers may benefit from trade (e.g., those who get higher-paying jobs when exporters expand their production), others bear the costs (e.g., those who are displaced because of import competition). During the current U.S. economic expansion, for instance, employment has grown by almost 20 million jobs and the unemployment rate has fallen from 10.0% to 4.0%, while at the same time U.S. merchandise imports have increased nearly 50% in nominal terms (Figure 1). In addition, the expansion of production increasingly requires advanced technology but relatively less labor. As a result, for many products, labor-intensive activities like assembly have https:/Icrsreports.congress.go

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline.

Purchase Access

Contact us for annual subscription options:

Contact Us

Already a HeinOnline Subscriber?

Log In

profiles profiles most