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Rising US Protectionism Will Pose Challenges for Exporters, Economist Says

A possible rise in U.S. trade protectionism under the incoming Donald Trump administration could lead to several key “constraints” on the American economy, especially for exporters, said Mary Lovely, a senior fellow at the Peterson Institute for International Economics.

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Lovely, speaking during a PIIE event last week, said a U.S. effort to remove Chinese inputs from American supply chains likely will pass higher costs on to U.S. exporters that rely on some imported Chinese parts. Although Lovely said incoming Trump officials have floated the promise of tax cuts that could benefit key American exporters, she also said the positive effects of those tax cuts could be “muted” as exporters try to “meet the challenge of competing in foreign markets against competitors who are not facing the same constraints and higher costs.”

U.S. actions to drive up import costs will “obviously” disadvantage explorers, she said, “and the economic realities may come home very soon to the White House.”

Lovely also noted that the U.S. is the second-largest exporter in the world, and exporting companies “are enormously important employers in the United States, and do the bulk of job creation within the manufacturing sector.” She said she’s expecting “intense lobbying” on behalf of exporters during the next administration.