Spotting the failings is easy, but where’s the new paradigm for global commerce?
Economists still tend to strongly back trade liberalization. But the cozy consensus in favor of removing trade barriers is eroding. The experience of the China shock, in which a sudden wave of import competition devastated the lives of many American manufacturing workers, was a wake-up call. The bipartisan backlash against trade agreements, which threatened to leave economists in the political wilderness, was another. Economists such as Rodrik and Bivens, who have criticized the free-trade consensus for a long time, are getting heard more, while free-trade defenders such as Clausing are forging more nuanced arguments.
Economists are starting to agree that free trade has two big weaknesses: unfairness and politics.
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