Trade off

Alignment between Democrats and Republicans?

Key takeaways

  • International trade issues have not received much attention from the Democratic field of presidential candidates until recently.
  • Both parties are now wary of trade agreements that could jeopardize American jobs.
  • 74% of Americans agree that international trade is good for America; however, only 36% of Americans believe global trade creates jobs (source: Pew Research Center survey).
  • The cost of tariffs in 2018 was passed through to US consumers in the form of higher prices, at an average cost of USD 419 per US household (source: New York Fed).

President Trump’s use of tariffs is increasing everyday costs for Americans, and may pose a challenge to US economic growth. However, the president appears to have tapped into deep doubts among Americans about the benefits of free trade. And now, most of the Democratic field is necessarily aligned with the thrust of the current administration’s trade policies.

This suggests that America’s global trading partners may not find themselves in a better position even if control of the White House changes in 2020. Though, our CIO research strategists believe President Trump would gladly ink a trade pact with China before the next election.

US consumers are currently paying for tariffs in the form of higher prices, but unless the economy slows, the president’s hard stance on trade is likely to continue to resonate with voters, which poses a conundrum for Democratic opponents.

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Research from CIO GWM is provided by UBS Financial Services Inc. UBS Financial Services Incorporated of Puerto Rico is a subsidiary of UBS Financial Services Inc. In Canada, research from CIO GWM is provided by UBS Investment Management Canada Inc.

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