Why Trade Matters

International trade has become a flashpoint in the 2016 elections. Candidates from both parties have talked about trade as a net negative issue during debates and campaign speeches. This near-constant demonization is dangerous and fails to recognize the importance of free trade — and imports in particular — to the U.S. economy.

Without free trade, consumers would not have the wide variety of products currently available on a daily basis at reasonable prices.

Jonathon Gold
NRF Vice President, Supply Chain and Customs Policy

Trade has always been a difficult issue during an election season, but seems to be more of a target than normal this year. This is due in part to the ongoing debate in Congress about the recently concluded Transpacific Partnership agreement. Many politicians came out in opposition to the agreement before negotiations were even completed. While not perfect, the agreement will ensure that the United States remains at the forefront of the global economy and continues to write the rules for global trade.

For retailers, TPP provides opportunities to continue to expand sourcing around the world, ultimately providing benefits for U.S. consumers, as well as the opportunity for U.S. retailers to reach new customers by breaking down barriers to opening stores and digital commerce platforms in those countries — creating the ability to sell U.S. goods and services that foreign consumers so eagerly want.

Opponents of free trade tend to focus their criticism on the loss of U.S. manufacturing jobs, but there are many reasons why factories have relocated. Advances in technology, automation, regulatory restraints and a strong U.S. dollar have all impacted U.S. manufacturing: It’s not just an attempt to chase low-wage labor overseas.

A great deal of critics’ emphasis is placed on the loss of export-producing jobs. Often lost in the debate, however, is the vital role imports play in the U.S. economy — not only finished consumer goods, but the parts and raw materials that are turned into finished products and then exported.

Imports support millions of jobs. As we know, retail supports one in four U.S. jobs, or 42 million working Americans. Of that number, 7 million jobs are directly or indirectly associated with trade. Many of these are good, high-paying jobs in design, logistics, compliance, technology and a host of other important processes. No, they aren’t traditional manufacturing jobs in a factory, but the U.S. economy should not be judged by factory workers alone.

Also lost in the debate is the importance of trade to consumers. Without free trade, consumers would not have the wide variety of products currently available on a daily basis at reasonable prices. Some candidates are talking about placing high tariffs on imported products as a way to save manufacturing. Unfortunately, these high tariffs wouldn’t punish companies — they would punish consumers who rely on such products. Tariffs are nothing more than hidden taxes that hurt U.S. consumers, especially working- and middle-class consumers. Such tariffs would have the opposite of the effect being espoused by candidates and would only serve to hurt the U.S. economy, not help it.

It is important that the facts are told about trade. Trade is not always a win-win, as there are some industries that can be negatively affected. However, when evaluating trade as a whole, the U.S. wins more than it loses. There is no denying that free trade should be fair, and it is critical that countries live up to their requirements in free trade agreements. If not, then enforcement actions should be taken.

NRF has always supported free trade policies that ultimately benefit retail consumers in the U.S. and around the world. Trade helps lead less-developed countries on a path of development. The U.S. must continue to lead such efforts through engagement, not protectionist actions.