Since Jan. 20, President Donald Trump has been implementing his new protectionist trade policy, with tariffs either placed or threatened on products from China, Mexico and Canada. Additionally, he’s introduced reciprocal tariffs, meaning the U.S. will now match tariffs imposed on itself by other countries.
One of the reasons for these policies is the large, multi-year push in Congress urging the U.S. to close its trade deficit, something that is harmful to economic growth. But what if this trade deficit and new tariffs are not the true root of our nation’s economic issues?
Economics, broadly, is the study of how a society’s finite resources are distributed among its members. In a world where resources are becoming ever more finite, you cannot consider the future of the economy without considering the environment in which it stands.
So, what does this potential trade war mean for the environmental economy? Trade policy in the United States has never protected environmental conservation efforts. Global free trade agreements — spearheaded during the Uruguay Round of the 80s and 90s, the largest global negotiation on trade — allowed for the boom in global economic growth of the last 30 years. But this is also a main factor behind the unsustainable production methods that we know today.
What we’ve seen for many decades now is offshoring of production and manufacturing made easy by free trade agreements. Proponents of free trade claim that it creates well-paying jobs in countries that are otherwise worse off. But, oftentimes, multinational corporations purposefully target nations with abundant resources and few environmental or financial regulations. These areas end up experiencing long-lasting environmental degradation that ultimately imprison their economies.
We’re living in an era of dramatic shifts in global trade policies, from protectionism to liberalization — and at the heart of this shift lies the climate crisis. In the coming years, there will be a new definition of wealth for a nation, one that will consist less of financial assets and more of viable land and natural resources. What will an anti-deficit agenda look like in this new reality?
