Many of us spent our adult lives being told that free trade leads to optimal economic outcomes. The concept has been the basis of economics going back 200 years.
From the 1970s onward, free trade was the foundation of the U.S. – which meant buying goods from where their production was the most economically efficient.
From the 1980s and 1990s onward, the US government then went to free trade in services including labor, encouraging the importation of workers from abroad through a variety of visa offerings.
We were taught this was for the better – it led to lower prices for goods and labor.
Now, under Trump, the new mantra is that free trade is bad, only delivered lower cost goods to consumers and today we must work to raise the prices of goods and services to justify making them in the United States.
“We started saying things like, ‘We don’t care where things are made, let it be made in another country as long as it’s cheaper prices for America,'” Rubio said during a recent appearance on Fox News (1).
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The result was a system that prioritized lower consumer prices, even when achieving them meant shifting factories, supply chains and employment opportunities outside the U.S.
President Donald Trump is now trying to reverse that trend.
President Trump wants the U.S. to see higher prices.
This seems to targeting the tail end of the Baby Boom – 90% of which have just reached retirement or have already passed away. They worked during a period of high labor competition and lower wages – and now in retirement will be faced with higher prices for goods and services while now at the “fixed income” life stage. This seems a bit harsh.
Persistent inflation can erode the purchasing power of retirement savings, keep interest rates higher for longer and create fresh volatility in stocks and bonds — the very assets many Americans rely on to fund their golden years.
That does not necessarily mean Trump’s strategy is wrong. It means the effort to restore American industry could create a difficult transition for households that have grown accustomed to cheap imported goods and steadily rising financial markets.
For retirees and workers approaching retirement, the question is no longer just whether America can rebuild its factories.
It is whether their nest eggs are positioned to withstand the higher prices and market turbulence that could come with it.
This does not look good. It means everything we’ve been told from “experts” has been a lie which disrupts trust in institutions even more.
