Mass public opinions towards trade balances: Mercantilism 2.0

The deterioration of international trade cooperation is ongoing. Especially in the context of the trade war between the U.S. and China, the bilateral trade imbalance has been vociferously problematised. For many contemporary economists, the vilification of trade balances is puzzling. The conventional economic wisdom therefore cannot explain the renewed importance of trade imbalances. I argue that the power transition between the U.S. and China incentivises elites to tap into intuitively appealing trade balance beliefs to galvanise support for a more confrontational approach towards the rising power. I seek to gain a better understanding of such dynamics by exploring public trade balance opinions of the elite and the mass public. Thus, I explore news media content and conduct representative survey experiments in the P.R. of China and the U.S. (n=4181). I find that the bilateral imbalance topic has become more salient over time. Citizens from both countries view trade deficits more negatively than surpluses. In addition, particularly deficits with political competitors are rejected. Especially in the U.S., as the declining power, a trade deficit is associated with unfairness and unequal benefits. My findings thus highlight why the trade imbalance is a key point of contention in U.S.-Sino relations. In this intensifying power transition context, seemingly passé mercantilist ideas are likely to be resuscitated again.