The Analysis of The Articles "Mr. Trump’s Trade War" by Douglas A. Irwin & "The Four Fallacies About Trade Globalization"

This Analysis is based upon the articles “Mr. Trump’s Trade War” by Douglas A. Irwin, and “The Four Fallacies About Trade Globalization”. First, I will summarize “Mr. Trump’s Trade War” article and then, I will summarize “The Four Fallacies About Trade Globalization” in order to compare and contrast the two articles and then support them with a third article, “By Trashing Mexico, Trump Hurts the U.S.” by Robert B. Zoellick. All three articles have something in common which is trade, the first article focuses on Trump’s idea of trade, the second article focuses on the fallacies about trade and the third article focuses on how Trump’s idea of trade combined with the fallacies of trade and globalization is hurting the U.S.

“Mr. Trump’s Trade War” by Douglas A. Irwin, published December 15th of 2017, focuses on three fundamental points. First, Irwin starts by stating Trump’s point of view or idea towards foreign trade and the lack of reciprocity it brings. Trump wants to deal with each individual country instead of respecting the rules on foreign trade. He emphasizes how Trump’s idea has already been attempted in the past and has never worked. Economists since Adam Smith have argued that in order to achieve a trade balance, what matters is reciprocity. Secondly, the author emphasizes when the U.S. got its independence and how changing the rules on trade deals is the only approach that has worked.

Lastly, the author concludes “Mr. Trump’s Trade War” by disagreeing with the president of the United States. Douglas A. Irwin disagrees with how the president treats each country individually and how as a consequence he is planning to handle trade. The president’s ideas are really important because they basically represent the country, and according to Irwin’s article, Mr. Trump is pushing the country to a bad reputation, therefore, vulnerable to a situation were no country would want to share any trade deal.

“The Four Fallacies about Trade and Globalization” by Ajai Gaur and Ram Mudambi, published December 27th of 2016, focuses on four fundamental points, which are the four fallacies about trade and globalization as the title of the article mentions. The four fallacies that underline these common political arguments are:• Manufacturing jobs are the basis of American prosperity.• Imports makes us poorer.• Success of foreign firms always help foreign countries, success of U.S. firms always helps the U.S. economy.• To export, firms must sell to buyers in foreign countries.

First thing that the authors are basically saying is that not having to manufacture means that the country has improved in its economy by creating the opportunity of becoming a service providing nation. Secondly, they explain how this is a fallacy since deficits caused by imports are not measurement to economic growth. And lastly, the authors emphasize on the faulty idea that exports are only between companies selling a product directly to foreign firms but in fact other firms or companies inside the country contribute to the production of x item or product that will later on be exported.

Ajai Gaur and Ram Mudambi are both professors of international business strategy at Rutgers University and Temple University and in their article, and by analyzing the four fallacies associated with trade, globalization and manufacturing in advanced economies, they urge politicians to reject the fallacies and citizens to make informed decisions before voting. “By Trashing Mexico, Trump Hurts the U.S.” emphasizes on how without Nafta, American business would lose protection from populism south of the border. Over the past years, presidents of both parties, Republican and Democratic, have recognized the benefits from working with Mexico and Canada, but not Mr. Trump. His approach basically consists on the rejection of internationalism based on a hostile nationalism.

The author of the articles mentions how illegal immigrants are mainly from Central America and suggests that Washington should cooperate with Mexico to create a multistage defense. Mr. Trump’s attitude towards Mexico, the decisions he is making and the plans he have for a future are not just a matter of bad reputation but there are negative for the economy as well. According to the article, Mr. Trump’s policies will actually increase costs and weaken the global competitiveness of the U.S.

To conclude, there is no question that globalization has been a good thing for many developing countries who now have access to U.S. markets and can export cheap goods. Globalization has also been good for Multi-national corporations and Wall Street, but it also has not been good to blue or white collar working people as it has led to the continuing deindustrialization of America. Since globalization has become a complicated issue, there are many different opinions about free trade, competition, democracy and other factors that are involved in the success of globalization. Some opinions agree with the thoughts that Mr. Trump has about trade and some others’ opinions strongly disagree with the president of the United States.

The authors of the articles mentioned in this essay disagree with Mr. Trump mainly because of one reason, trade. Free trade is supposed to reduce barriers such as tariffs, value added taxes, subsidies and other barriers between nations and Mr. Trump is focusing on the opposite and he is trying to treat each country individually which it is not possible or logic because of different reasons such as the size of a country, its resources, among other things that are there to consider when it comes to trade. The U.S. president is also going with the fallacies of trade and globalization by believing that imports make a country poor and that foreign firms cannot provide benefits for economies of other nations, and lastly, he is having a negative attitude that not only affect the way he represents the United States in front of the whole world, but also breaks the North American Free Trade Agreement (NAFTA), which in 1994 came into effect creating one of the world’s largest free trade zones between Canada, the United States and Mexico.

References:

1. Irwin, Douglas A. (2017). Mr. Trump’s Trade War.
2. Gaur, Ajai & Mudambi, Ram. (2016). The Four Fallacies About Trade and Globalization.
3. YaleGlobalZoellick, Robert B. (2017). By Trashing Mexico, Trump Hurts the U.S.
4. The Wall Street Journal Collins, Mike. (2015). The Pros and the Cons of Globalization. Forbes.