Written by Joseph Joyce
International trade and immigration were flashpoints of Donald Trump’s presidential campaign, and in his first year he has shown that he intends to fulfill his promises to slow down the movements of goods and people. Last month negotiations over NAFTA began with Canada and Mexico, with the U.S. trade representative Robert Lighthizer announcing that current bilateral deficits “can’t continue.” The President threatened to shut down the government if Congress does not approve the funding for a wall with Mexico—a threat that seems to have been retracted in view of the need to approve funding for relief funds to Texas. But another aspect of globalization—international financial flows—seems to have escaped the President’s wrath. The reason for this divergence tells us much about the reasons for the President’s opposition to economic globalization.
President Trump has complained about exchange rates, particularly those of China and Germany, insisting that their governments lower the value of their currencies to increase exports to the U.S. But the U.S. Treasury did not label either country a currency manipulator in its latest report, although they made the “watch list.” (How Germany manipulates the euro has yet to be demonstrated.) Similarly, Trump received considerable press coverage during his campaign when he attacked U.S. firms that allegedly transferred U.S. jobs abroad. Recently his indignation seems to have trailed off, and has been replaced by the assertion that lower corporate tax rates will serve as an incentive for U.S. firms to repatriate funds held abroad that they will spend on domestic investments—a claim with little evidence to back it up. The President has rarely voiced any concern about the impact of financial globalization.
While Senator Bernie Sanders did not make international finance a focus of his campaign for the Democratic nomination for the presidency, he sharply criticized the financial sector. He called for the breakup of the largest financial institutions, and proposed a tax on financial transactions to finance public colleges and universities. Any of these actions would certainly affect capital flows. And Sanders expressed strong disapproval of the IMF’s programs with Greece.
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