Warren Buffett has weighed in on the free trade debate.
“Free trade is wonderful for the world and the United States. But its benefits are diffused among 320 million people,” he said in an interview with CNBC’s Becky Quick on Monday. “You buy your bananas cheaper because we don’t try and produce them in the United States. But the penalties from free trade are terrible to specific industries.”
“And as an investor, I can own — make a dumb decision on owning a shoe company, but if I own a good insurance company, I can diversify away the problems. If you are a 55 year old steel worker, you can’t diversify away your talents,” he added.
The billionaire investor, here, is touching on one of the most pressing issues in the US labour market: the American workers who have been displaced as the US chugs forward in the increasingly integrated global economy.
As American workers continue to worry about losing jobs to other countries, protectionism has grown quite popular stateside. And politicians across the political spectrum have zeroed in on these anxieties over the last year.
US President Donald Trump, in particular, made the debate over free trade one of the central topics of his campaign. He argued in favour of ripping up trade deals, said NAFTA was “the worst trade deal in the history of the country,” and called the Trans-Pacific Partnership, or TPP, “a rape of our country.”
And during his first week in office, Trump signed an executive regarding his intent to pull the US out of the TTP. Additionally, he has on multiple occasions stated his intent to “renegotiate” NAFTA.
Trade between countries can theoretically improve economic efficiency and make everyone wealthier by allowing countries to specialize in what they’re good at. Despite that, and as Buffett pointed out, the costs and benefits of trade aren’t always evenly distributed.