Trade and immigration – experiences from the US, UK, EU, and Brazil

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Americans are often uncertain as to what direction President Donald Trump’s economic policies are headed.

One can only imagine the questions raised in the minds of the British, Europeans, and nations like Brazil.

At first glance Trump is a standard-issue Reagan Republican: He cut tax rates across the board for individuals and corporations and reduced regulations while unleashing the oil and natural gas industries. Lower taxes and de-regulation brought strong growth, 50-year lows in unemployment and rising wages, particularly among the lowest-income Americans.

And then… and then the trade wars – both real and threatened — with China, Europe, Canada, and Mexico and visceral opposition to immigration. In the US, opposition to free trade and immigration are the historic positions of the Democrat party and the American labour union leadership.

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Yet the Trump administration has wielded tariffs and trade embargoes against friend and foe the way farmers view bailing wire and duct tape. They can fix everything and anything.

American businessmen and women are largely supportive of free trade. So are farmers who live in the square red states that vote Republican.

Tariffs on China have remained popular even as they increase steel and aluminium costs, which make American manufacturing less internationally competitive. Immigration restrictions have cut both ways politically, but are a net loss for the president’s popularity.

A protester gathers near the White House to demand comprehensive immigration reform. EPA-EFE//ASTRID RIECKEN

Now Europe is poking Uncle Sam with threats of digital taxation against America’s leading businesses such as Google and Facebook.

And while Trump commands the headlines the Democrats have told the world they are against opening up trade with Brazil for non-economic reasons: rainforests as sacred ground, the sense that Brazil’s new president likes Trump and environmentalism as a trade barrier. Would a President Biden reduce the tariffs on steel and aluminium and irritate the labour unions? Farmers and high tech are a constituency pushing Republicans towards free trade and more open immigration. Neither would have influence with Biden.

Still, there is hope for a U.S./ British free trade zone with most Americans seeing Britain as maintaining similar wage rates and environmental standards. There would be similar comfort with a USA/EU rapprochement on trade. There one fears the European left would use green issues to mask a protectionist agenda.

Kevin Smyth, a resident of Connecticut, works on filing his taxes at a post office in New York. EPA-EFE//JUSTIN LANE

Immigration will subside as a political issue in the United States when the US recovers from the COVID shutdown. Only a few months before the COVID shutdown arrived, President Trump spoke to a national conservative gathering and noted that America was running out of workers. He left unsaid that this would open the door to more immigrant-friendly immigration policy. Then we were desperately short of farmworkers, high tech workers and well “everything.”

The virus-induced high unemployment that delayed that immigration-friendly moment, but it will return if the underlying low tax, less burdensome regulation policies continue. Then, and only then, America will open its doors to talent and youth. President Ronald Reagan’s amnesty of 1986 was popular because the economy was in its fourth year of strong growth. Immigration became contentious when the economy crawled during the Obama years.

Immigration and more open trade are easier for politicians to support when the world’s economy is growing. The Catch-22 is that stronger growth will require both. Chicken. Egg.

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