Americans actually don’t hate trade agreements

There has been a lot of heated debate in the news media and the election campaigns about international trade. In the first presidential debate, candidate Donald Trump relentlessly flogged the issue, declaring that trade had hollowed out American industry. On the left, antitrade sentiment continues to simmer, much of it focused on opposition to the Trans-Pacific Partnership. Meanwhile, the economics field is still dealing with the fallout from a recent paper by some top economists showing that trade with China in the 2000s hurt U.S. workers more than it helped.
But amid all this uproar, the general public has remained remarkably calm and composed on the issue. A number of recent opinion polls show that the majority of Americans remain quietly optimistic about the benefits of trade. For example, a Gallup poll earlier this year found that more Americans view international trade as an opportunity than as a threat. Other recent polls, including one by NBC/WSJ, another by Washington Post/ABC and a third by Pew, find the same thing — U.S. residents are still broadly positive about trade.
One interesting development, though, is a recent partisan divergence. Where Republicans were more pro-trade than Democrats in the early 2000s, they are now much more likely than either Democrats or Independents to express negative opinions. That might simply reflect the fact that President Barack Obama has been a champion of trade agreements, while Trump, the Republican nominee, has been a fierce opponent.
The public also doesn’t see all countries as the same when it comes to trade. For example, a very new survey by Politico and Harvard’s T.H. Chan School of Public Health found that while Americans think positively of trade with most countries, they’re very negative about China and somewhat negative about Mexico: Even Japan, a Trump bogeyman and the subject of much protectionist sentiment in the 1980s, gets much more positive than negative reviews as a trading partner. It’s really only trade with China, and to a lesser extent Mexico, that bothers most Americans.
In China’s case, at least, the public is spot on. In their by-now-famous paper on trade and labor markets, David Autor and his co-authors find that the so-called China shock — the explosion of imports from China during the 2000s — was uniquely bad for American workers. When globalization took off in the 1980s and 1990s, American workers whose jobs were displaced by imports mostly managed to find jobs in other, similar industries, for similar wages. But China entered so many industries so quickly, and with such inexpensive products, that displaced workers often just had nowhere to go. Many of them ended up working in low-paid, low-skilled service sector jobs, or on the welfare rolls.
So when it comes to trade, China really was a new and different story from Japan, Europe, South Korea and other U.S. partners. Trade with those other countries caused healthy reallocation between sectors. When Japanese competition put American machine tool manufacturers out of business, the machine tool workers could find jobs in semiconductor factories, or computer factories. That’s how trade is supposed to work in the economics textbooks. It was only in China’s case that the textbook theory broke down.
Somehow, the public realizes this, while free-trade defenders haven’t yet. Many continue to simply repeat textbook theories, apparently in the belief that people are uneducated about the subject. But the nuanced views apparent in the surveys show that the public probably understands the situation better than the pundits who robotically apply the same simplistic theories to all situations. Those pundits don’t understand that China was different, but Americans do.
The public might be a little too harsh on Mexico, but doesn’t get it egregiously wrong. Most estimates of the North American Free Trade Agreement’s effects on the overall U.S. job market show very little change. Nafta helped Mexico a lot, but its effect on the U.S. was just not that big. And it was nowhere near as disruptive as the China shock. The American people, who are about evenly split on the treaty’s effects, seem to implicitly realize this.
So it’s worth rethinking old nostrums about trade and the public. Among many economists and econ pundits, the conventional wisdom is that most people are knee-jerk protectionists who don’t understand the benefits of trade, and who must be repeatedly clubbed over the head with the beautiful simplicity of first-year undergraduate theory. Meanwhile, the Trump campaign, an increasing number of Republicans, and some on the left seem to think that fiery opposition to trade is a winning issue. But this looks wrong; Americans have a level-headed, nuanced and accurate view of the value of trade.
—Bloomberg