How Badly Has the United States Been Ripped Off by the Post-WW2 Economic Order? – Currency Thoughts
How Badly Has the United States Been Ripped Off by the Post-WW2 Economic Order?
April 13, 2025
The moral basis for President Trump’s punitive tariff policy has been the assertion that the progression of free-trade treaties over the past 80 years have been unevenly practiced, resulting in a huge disadvantage for America’s economy. In a nutshell, making America great again is about undoing that system.
If that accusation is correct, one would have expected U.S. real GDP growth to have lagged behind other major economies, but that is not what happened. Over the eight years between 2016 and 2024 that covers the first Trump and only Biden administrations, U.S. inflation-adjusted gross national product climbed 21.6%. The United States belongs to the so-called Group of Seven industrialized countries, along with three members of the euro area (Germany, France, and Italy), Great Britain, Japan and Canada. Euroland GDP in the above eight-year period advanced 11.2%, roughly just half as much as U.S. GDP. British and Canadian GDP expanded by 9.6% and 15.0%, while Japanese GDP eked out net growth of just 3.3% in the period. Growth in two other European industrialized economies during those eight years were similar at 12.4% in Switzerland and 12.8% in Sweden. None of these economies came close to matching the U.S. performance.
But what about the case of China, whose heavy-handed industrial policies have been cited by many recent U.S. presidents for their unfairness? Hasn’t Chinese GDP outclassed the elite industrialized western economies? All true. Chinese GDP grew 52.0% between 2016 and 2024, more than twice as much as U.S. GDP. Despite having the world’s second largest economy now, China is still considered a developing nation, not a developed one like those that belong to the Group of Seven. Developing economies typically expand at much faster rates than developed ones.
A different comparison of GDP growth in the U.S. and China illustrates that while Chinese GDP is expanding faster than U.S. GDP, those rates are already converging. Let’s take a different eight-year period, 2003 to 2010. In that interval, Chinese GDP climbed 109.5% or twice as much as in the later examined period from 2017 to 2024. U.S. GDP in the earlier period, which includes the Great Recession, rose 16.0%, about three-quarters of a percent slower than in the period covering the Biden and first Trump presidencies. While Chinese GDP grew only half as much in the more recent period than the earlier one, U.S. GDP attained a somewhat quicker rate of expansion.
On all these tests, it’s hard to make the case that the post-world war 2 international monetary system has been so disadvantaging to American growth that such should be replaced by an arrangement more akin to the years between 1870 and 1910, a period that laid the seeds for two world wars in the first half of the 20th century.
Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: U.S. tariff policy
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