In Trump’s shadow, Fed official says trade barriers a ‘dead end’
Trade protectionism is a “dead end” that may score political points but will ultimately hurt the U.S. economy, one of the most influential Federal Reserve officials said on Thursday in the central bank’s strongest defense yet of open borders in the face of a skeptical Trump administration.
William Dudley, head of the New York Fed, did not mention U.S. President Donald Trump by name in a speech at the Bombay Stock Exchange. But he gave a full-throated economic and even political argument for resisting trade barriers that he said would hurt growth and living standards in both the United States and around the world.
“Protectionism can have a siren-like appeal,” said Dudley, a close ally of Fed Chair Janet Yellen and a key decision-maker on U.S. interest-rate policy.
“Viewed narrowly, it may be potentially rewarding to particular segments of the economy in the short term,” he said in prepared remarks. “Viewed more broadly, it would almost certainly be destructive to the economy overall in the long term.”
The White House has said trade deals often do more harm than good for U.S. workers and companies, especially those in the manufacturing sector hard-hit by globalization. Over the last 25 years trade has grown to represent roughly 57 percent of global output, from less than 40 percent.
Dudley said he was speaking out because “we are at a particularly important juncture” in which trade issues could imperil the long-term health and productivity of the economy and “the economic opportunities available to our people.”