Accounting for Trade: President Trump and the “Geopolitical Balance Sheet”

by William Jannace, LL.M; and Professor Paul Tiffany, PhD

It is the intersection of politics and economics that motivates the behavior of most nations when it comes to cross-border trade and investment. However, public commentary often separates these domains when discussing implications of a given policy or proposal for national well-being.¹ This is unfortunate, as it too often limits the proper assessment of political benefits and costs from the policies and actions under discussion. To alleviate this, we propose the notion of a “Geopolitical Balance Sheet” as a better approach to evaluate trade policy outcomes, along with the incorporation of traditional accounting notions of “assets,” “liabilities,” and “owners’ equity.” We believe this is a particularly appropriate time to consider such a proposal, not only because of the new Trump Administration’s frequent pronouncements on trade but also because such terminology might have a more meaningful impact on the business-friendly inclinations of many supporters of this Administration. “When goods don’t cross borders, Soldiers will.” This saying has been ascribed to French economist, Claude Frédéric Bastiat-whether he said it or not-it is we believe particularly important today.

In addition to surrounding himself with several key economic advisors who have left little doubt about their negative views regarding globalism and its supporting institutions, President Trump himself has made multiple negative public pronouncements regarding cross-border free trade, declaring he will “put America first” through policies he terms “fair trade” (Fox News, October 18; M. Fisher; U. Friedman). These include withdrawal from the Trans Pacific Partnership, calls to abandon the long-standing reliance on multi-lateral trade treaties and in their place negotiate bilateral deals, impositions of “Border Adjustment Taxes” on imported goods, new tariffs on imports from China, claims of currency manipulation by China, Germany, and others, and urging citizens to “buy American” and business firms to “hire Americans” (D. Trump, “Inaugural Address”).

Yet while perhaps appealing to many, these actions are not the best long-term means to address the negative side effects that globalization, free trade, and broader neoliberal economic policies have created in this country, and throughout parts of the world. Though we would be among the first to agree that such issues as worker displacement, loss of manufacturing jobs, trade deficits, and growing despair and social alienation for millions of individuals are more than worthy of public interest and attention, the imposition of President Trump’s trade agenda would not only punish those whom he wants to help but could also destroy the political-economic foundations of the world as it exists today.

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