In an unusual turn in American politics, the presidential nominees of both major parties are opposing expansion of free trade in general, and President Obama’s Trans-Pacific Partnership (TPP) agreement in particular. Trade continues to be a big issue on the campaign trail, as both Donald Trump and Hillary Clinton recently outlined their economic plans, speaking out against the TPP. This anti-trade appeal is puzzling given that three different 2016 polls from leading pollsters find solid majorities of U.S. citizens in support of free trade.
The protectionist turn among the presidential candidates contradicts the policy positions of recent candidates as well as standard economic logic. Centuries of work in international trade demonstrate that trade’s overall effects are economically beneficial for the United States–so new agreements that liberalize trade further should be good for the country as a whole. If so, why are both candidates opposing TPP?
Part of the reason is that the gains from trade are unequally distributed across workers and regions of the United States. The United States remains a relatively-high skill-abundant country, which means we have comparative advantage in high-skilled products and services. The persistent and growing trade surplus in tradable services, such as business and professional services, demonstrates its comparative advantage in this sector, which now accounts for 30% of U.S. exports. In the United States, this has meant that highly-skilled service workers and their employers have been winning from the expansion of trade, through higher wages and increased job opportunities.