US workers sacrificed by free trade system  - Nomura

Analysts at Nomura explained that economists have argued that while free trade creates both winners and losers within the same country, on the whole, it offers significant welfare gains for both trading partners compared with the world in which they did not trade at all. 

Key Quotes:

"However, this conclusion is based on one key assumption: that as free trade expands, imports and exports will be largely balanced. When—as in the US over the past 30 years—that assumption does not hold and a nation continues to run massive trade deficits, a different conclusion may be possible. And today the US is running a trade deficit of almost $800bn."

"While rising worker incomes may be able to keep trade deficits from becoming a major political issue, US workers’ incomes have been stagnant for nearly 30 years. As noted above, free trade creates winners and losers within the same country, and in the US today, the number of losers was large enough to send President Trump to the White House. 

That forex market participants have continued to ignore this $800bn trade deficit and support the dollar suggests a belief that continued deficits on this scale will not pose a problem. However, President Trump’s election victory signaled that there is something fundamentally wrong with that assumption. In other words, a substantial part of what we called the “free trade” system over the last three decades was actually built on the sacrifices of US workers."