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.