Protectionist policies may help leaders make political gains, as is currently happening in various parts of the world, but are unlikely to benefit the economy
Latest News »
- J&K: Mob lynches man in Srinagar after catching him clicking pictures
- Kulbhushan Jadhav case: India slams Pakistan over ‘confessional video’
- Presidential polls: Ram Nath Kovind to file nomination today in presence of PM Modi
- Opening bell: Asian markets open mixed; Tata Power, Lupin in news
- Flipkart, Snapdeal merger at risk as Azim Premji’s PremjiInvest objects
During his election campaign, US president-elect Donald Trump proposed imposing higher tariffs on imports from China and promised to label it a currency manipulator. The motivation is to bring jobs back to the US. Economists have warned against any such misadventure as it could trigger a trade war, leaving everyone, including the US, worse off.
A new research note put out by the US Federal Reserve supports what economists have been saying all this while and shows that the US actually benefited from imports as it led to greater innovation.
The note, which mapped innovation—quantified by the number of patents—and flow of imports, said: “…the rapid rise of Chinese imports contributed to making the United States a champion of technological innovation”.
The upshot: Protectionist policies may help leaders make political gains, as is currently happening in various parts of the world, but are unlikely to benefit the economy. How Trump actually approaches trade policy after taking office will be keenly watched.