Hawaii stands to lose 17,000 jobs if Donald Trump is elected president and fulfills his campaign pledge to unleash trade wars with China and Mexico. Oahu would suffer the bulk of the job losses, followed by Maui. And this is just a small taste of what might happen nationally.
Trade issues have seldom reached the top of the U.S. political agenda. For decades, a consensus in favor of an open U.S.-led trade system held. But the 2016 election has marked a departure from this pattern. Both major candidates, Hillary Clinton and Donald Trump, oppose the Trans-Pacific Partnership (TPP), the single major trade initiative under consideration. This opposition is regrettable: TPP would deliver significant gains to the U.S. economy, and its failure would be a blow to both the U.S. economy and U.S. standing in Asia.
But Trump goes much further than Clinton, promising punitive tariffs on China and Mexico, at times advocating firm-specific tariffs (which are historically unprecedented, illegal, and probably uncon- stitutional), talking about abrogating “disastrous” free trade agreements, and even considering withdrawing from the World Trade Organization. That last move, if implemented, could undo 80 years of economic diplomacy and plunge the U.S. back into the Smoot-Hawley world of the Great Depression.
The sobering reality is that legal experts believe that under a variety of statutes, the president has considerable executive authority to do these things. Even if Trump were ultimately stymied by the Congress or the courts, that process would be time consuming, giving him ample opportunity to wreak havoc.
Analysis from the nonpartisan Peterson Institute for International Economics finds that in a scenario in which the U.S. imposes tariffs on China and Mexico and they respond in kind, the U.S. economy goes into a recession, with private sector employment falling by nearly 5 million jobs. Using conventional economic models based on national income, employment, and other macroeconomic variables, together with models capturing the sectoral linkages within the economy, the study finds capital goods industries would be hardest hit. The trade shock would then propagate throughout the economy, also destroying jobs in sectors such retail trade, restaurants, and temporary employment agencies. Millions of jobs that appear unconnected to international trade — many of them filled by lower-skilled and lower-wage workers — would be at risk.
Washington would be the worst-hit state, experiencing a loss of private sector employment of more than 5 percent. However, a broad array of states, including a number of so-called battleground states, would suffer employment declines of more than 4 percent. Los Angeles would be the worst affected county in America (176,000 jobs lost) followed by Cook County in Illinois (Chicago) (91,000), and Harris County in Texas (Houston) (89,000).
Other less-populous counties across America are hit with even more severe losses in relative terms, with 29 counties suffering employment losses of 7 percent or more.
Santa Clara County, Calif., loses 64,000 jobs or 7.6 percent private employment, for example.
In Hawaii, the national recession would adversely affect tourism. But that is not the only channel through which the state would be hurt. I recently met a small businessman in Honolulu who exports wood products to China. If China imposed a high tariff, his products would no longer be competitive, and he would have to lay off employees.
When asked about trade wars, Trump insouciantly replied, “Who the hell cares about a trade war?” In these trade wars, the American casualties will be numerous and disproportion- ately drawn from the ranks of lower-income citizens.