Comparing The 5th Economic Principle And President Trump's Proposed Trade Policies

The 5th Economic Principle and President Trump's Proposed Trade Policies

President Trump’s proposed trade policies are detrimental to the future economy of the United States and are contrary to the 5th Principle of Economics. In the 5th Principle of Economics, trade between two or more countries makes each country better off. Trade allows each country to specialize in certain goods as exports, allowing each country to make better use of their scares resources. Trade allows all countries to gain from the benefits of importing and exporting goods. It also allows a country that may have surplus in a particular goods trade for a good it has a deficiency in, allowing each country a vast variety of goods to choose (Mankiw, 2012). When the trade

goods, which mean higher prices for the consumer. Which will affect the U.S. economy by increasing inflation, higher prices on goods and overall lowers the GDP. Furthermore, there is a possibility that the cost of doing business overseas would cause political issues for multinational companies. If the proposed trade policies go into effect, multinational companies may be caught-up in trade wars and pay higher cost of doing business in another country. These higher costs would be once again past to the consumers of these products. (Ghemawal, 2016). On an analysis by Moody’s Analytics, President Trump’s trade policy is bad for the economy of the United

In return, the United States exports “$100 billion in products” to China and “$250 billion” to Mexico. These two countries could easily pass the cost onto American consumers by increasing prices of these goods to 3% or more. In the long-run without the any trade policy change the GDP estimated performance in 2026 would be $20.5 trillion, with trade policy changes this would change to an estimated $19.7 trillion or less. This would affect the economy, employment and the increased cost of goods would decrease consumer spending sending the United States into a recession (Zandi, Lafakis, White, & Ozimek,