University of Maryland
The 2016 election was unique in that — for the first time in 75 years — candidates from both political parties, Donald Trump and Senator Bernie Sanders, ran for their party's nomination on platforms that were explicitly hostile to international trade and investment. Why did this happen? In this video, Jeffry Frieden, Professor of Government at Harvard, discusses his research on county-level voting patterns in the 2016 U.S. elections.
Many of the counties that saw the biggest swing in voting patterns between the 2008-2012 elections and 2016 were counties in the industrial belt that have suffered decades of decline due to technological change and trends in international trade and investment. In this context, broad international economic trends have an on-the-ground impact on local society and local politics and, eventually, on national politics.
Because of increasing reliance on international trade, the special role of the U.S. dollar as an international currency, and the vast flows of borrowing and lending in the global financial market, what happens abroad impacts the United States.
It is important to understand that U.S. economic policy impacts foreign markets as well and that those effects are likely to spill back to the U.S.
The tariff war imposes costs on U.S. consumers, firms, and farms. But determining who bears the bulk of these costs can be complicated. Economists have begun to analyze the initial impact of the first sets of tariffs — giving a first glimpse of how these taxes on imports are being absorbed across the U.S. economy. These studies also provide a way of thinking about how the costs of further escalation might be distributed.
Several studies show that the cost of recent tariffs on Chinese exports is fully passed on into prices paid by the importer of record at the border. They also strongly suggest that these increases in tariff-inclusive prices at the border increase prices for firms and consumers, not just the intermediaries and upstream firms. Further escalation of the trade war is likely to raise the costs.
Immigration is not a one-way flow into the United States: There is significant turnover, with many of the foreign-born who work in the United States leaving the country after some time. Studying the characteristics of immigrant workers who leave the country and those who stay can give us a better understanding of how work trajectories might impact immigrant selection and assimilation.
A large proportion of documented immigrant workers who entered the United States in 2005-2007 left within a decade. Those most likely to leave had consistently lower earnings than Americans with similar levels of education and tended to have a decline in earnings in the years before they left. This seems to indicate that, in addition to the requirements set out by different visa categories, the experience with U.S. employment also helps to shape the characteristics of the immigrant population that winds up staying in the United States.
China has been moving from an exchange rate regime in which the yuan was pegged to the U.S. dollar to one in which the relationship between the two currencies is somewhat looser. But the path to this transformation has been bumpy. The difficulties illustrate the challenges China faces in the process for determining the value for its currency.
A relatively stable and predictable exchange rate between the yuan and the dollar facilitates trade and investment decisions for businesses in China and the United States. But staying too close to the dollar can be a problem for China with respect to its other major trading partners in East Asia, Europe and elsewhere.