Join us for the next Risk Series session on February 21, 2018, as we discuss how demographics drive the economy and the risks and impacts your business faces as a result.
Last week, it was announced that President Trump has placed steep tariffs on solar energy cells and washing machines. These tariffs largely targeted Asian manufacturers such as Samsung and LG and represent the first step towards the sort of economic protectionist policies that were the hallmark of his 2016 campaign.
Protectionist trade policies have been in place for decades, but they’re once again coming to the forefront of political discourse as a result of populist movements at home and abroad.
As part of the Risk Institute’s commitment to leading the conversation on risk and risk management, we hosted our first continuing professional development session of 2018 on the impacts of protectionism on global trade.
Speakers included Sarah Brooks, Professor at Ohio State University; Jose Souto from Cargill; and Prentice Wells from EY.
According to Sarah Brooks, Professor of Political Science at The Ohio State University, since the 2016 election, international political economy has hit home in the US reflected through increased populist sentiment, economic nationalism, and discontent with free trade agreements. Dr. Brooks was quick to point out that the US has long championed free and open trade while actually maintaining a protectionist economy.
Each speaker also touched on the “China Shock,” which took place from 1991-2012 when China’s share of world manufacturing value added grew from 4.1% to 24%. Of the 100 counties hit hardest by the China shock, Trump won 89.
Jose Souto from Cargill explained that protectionism can take many forms: tariffs, quotas, subsidies, exchange rate manipulation and others. Protectionist policies exist in theory to protect infant, recuperating, and declining industries; to protect basic and strategic industries; and to deter unfair trade practices. The efficacy of those policies depends on a myriad of factors, but nearly every nation in the world employees at least some protectionist economic strategies.