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On Trump’s Trade Policy, A Democratic Echo

On Trump’s Trade Policy, A Democratic Echo

If you want to get an unanimous verdict from any gathering of economists, just ask them about Donald Trump’s trade policy. If it were a movie, its Rotten Tomatoes score would be zero. One expert analysis after another has torched it.

A report from the Becker Friedman Institute at the University of Chicago found his tariffs on washing machines cost consumers $1.5 billion, or more than $815,000 per U.S. job saved. A study for the National Bureau of Economic Research concluded that Trump’s trade war has reduced Americans’ real incomes by $1.4 billion per month.

The Tax Foundation says the new tariffs amount to a tax increase of $42 billion on Americans. A team of economists from the University of Chicago, Northwestern and Stanford estimate that tariffs and trade squabbles cut investment in U.S. manufacturing by 4.2 percent last year.

NBER notes that Trump’s tariff hikes “are unprecedented in the post-World War II era in terms of breadth, magnitude and the sizes of the countries involved.” They haven’t worked in the most basic sense. The overall trade deficit in goods, which he promised to eliminate, hit a record high last year, and the imbalance with China.

To the surprise of no economist, his policy of blocking trade, and threatening to do so, turns out to be bad for consumers, producers and the economy. So how are Democrats running for president handling the issue? By offering their own version of protectionism.

On Monday, Bernie Sanders attacked Joe Biden by saying, “I helped lead the fight against NAFTA; he voted for NAFTA.” Like Sanders, Elizabeth Warren opposed the Trans-Pacific Partnership, a mammoth free trade deal among the United States and 11 Pacific Rim nations. Both also oppose the administration’s modest revision of NAFTA, the United States-Mexico-Canada Agreement.

The positions of Sanders and Warren, write Gary Clyde Hufbauer and Euijin Jung of the Peterson Institute for International Economics, “do not differ greatly from President Trump.” Among the other Democratic presidential candidates who opposed the TPP are Kamala Harris, Kirsten Gillibrand, and Amy Klobuchar.

From all this you might forget that the Pacific free trade deal was the proud achievement of Barack Obama — and was described as “the gold standard in trade agreements” by Hillary Clinton. The idea, by the way, originated with Bill Clinton when he was in the White House. You might also forget that it was Clinton who signed NAFTA and Obama who preserved it.

Biden is so far holding firm. In response to Sanders’ broadside, he said he didn’t regret voting for NAFTA. He’s a lonely voice. With the exception of Beto O’Rourke, the other Democrats who lean toward free trade, including Julian Castro, Jay Inslee, and John Hickenlooper, are relative unknowns.

But if the presidential candidates would like to move toward protectionism, their voters are not going with them. A Pew Research Center poll last year found that among Democrats and Democratic-leaning voters, 67 percent think free trade agreements have been a good thing. Only 19 percent take an unfavorable view.

By contrast, Trump has managed to convince a large share of Republicans to abandon their historic allegiance to open global commerce. Pew found that 43 percent endorse free trade deals — down from 57 percent a decade ago. A plurality of Republican and Republican-leaning voters, 46 percent, now regard free trade as a bad thing.

Among the electorate as a whole, however, 56 percent favor free trade and 30 percent oppose it. With his belligerent and destructive trade war, Trump has actually dried up support for protectionism, except in his own party.

Why are so many Democratic candidates advocating policies that are a loser not only with the public in general but with their own party faithful? The harm done by Trump’s import barriers ought to work to the advantage of the opposition. But Democrats may end up with a nominee who, on the topic of trade, is largely indistinguishable from Trump.

At best, a Sanders, Warren, or Klobuchar would be giving him a pass on one of his big vulnerabilities. At worst, they could force many moderate, independent voters to decide that on economic matters, Trump is the lesser of two evils.

Free trade should be a good fit for a party that favors liberal immigration policies, friendly relations with our neighbors, and constructive engagement with the world. Trump has done his best to hand Democrats a winning issue for 2020 and beyond. But that doesn’t mean they’ll take it.

 

China Gets An Early Win Off Trump, But Many Battles Remain

China Gets An Early Win Off Trump, But Many Battles Remain

BEIJING (Reuters) – Combining public bluster with behind-the-scenes diplomacy, China wrested a concession from the United States as the two presidents spoke for the first time this week, but Beijing may not be able to derive much comfort from the win on U.S. policy toward Taiwan.

Several areas of disagreement between the superpowers, including currency, trade, the South China Sea, and North Korea, were not mentioned in public statements on Thursday’s telephone conversation between Presidents Xi Jinping and Donald Trump. In getting Trump to change course on the “one China” policy, Beijing may have overplayed its hand.

Trump had upset Beijing before he took office by taking a call from Taiwan President Tsai Ing-wen, then casting doubt on the “one China” policy, under which Washington acknowledges the Chinese position that there is only one China and Taiwan is part of it.

Trump changed tack and agreed to honor the “one China” policy during the call, prompting jubilation in China. Beijing had been working on diplomatic ways to engage Trump’s team and largely blaming Taiwan for stirring things up.

Laying the foundation for that call had been the low-key engagement of China’s former ambassador to Washington and top diplomat, the urbane and fluent English-speaking Yang Jiechi, with Trump’s national security adviser Michael Flynn.

“China was pragmatic and patient. It made every effort to smooth out the relationship, and it paid off,” said Jia Qingguo, dean of the School of International Studies at Peking University, who has advised the government on foreign policy.

But China also made very clear Taiwan was not up for negotiation, unleashing state media to threaten war and punishment for U.S. firms if that bottom line was breached.

China has long described self-ruled Taiwan, claimed by Beijing as its sacred territory, as the most sensitive issue in Sino-U.S. relations.

Its military had become alarmed after the Trump-Tsai call and was considering strong measures to prevent the island from moving toward independence, sources with ties to senior military officers told Reuters in December.

A source familiar with China’s thinking on relations with the United States, speaking to Reuters last month, said China had actually not been too bothered with Trump’s Taiwan comments before he took office as he was not president then and was only expressing his personal view.

“If he continues with this once he becomes president then there’s no saying what we’ll do,” the source said.

TSAI’S CHILLED HEART

Despite the U.S. concession, military tensions remain.

On Saturday, the overseas edition of the ruling Communist Party’s People’s Daily placed a picture on its front page of Chinese warships about to embark on a new round of drills in the South China Sea, right next to an upbeat commentary about the Xi-Trump call.

The paper’s WeChat account took a harsher line, saying that with Trump getting back with the program on “one China”, Taiwan had better watch out.

“The heart of that Madame Tsai on the other side of the Taiwan Strait must at this moment be chilled to the core,” it said.

One senior Western diplomat said China had been redoubling its efforts to win over the Vatican, one of a handful of countries to retain official ties with Taiwan.

Taiwan says it hopes for continued U.S. support, and one ruling Democratic Progressive Party official told Reuters that the “one China” policy had not affected previous U.S. arms sales to Taiwan, even as U.S. presidents’ commitment to the island have waxed and waned.

Xi has put great personal political capital into seeking a solution over Taiwan, an issue that has festered since 1949 when defeated Nationalist forces fled to the island after losing the civil war to the Communists. China has never renounced the use of force to bring Taiwan under its control.

But in its relations with Washington, the risk for Beijing remains that its diplomatic win over “one China” will be short lived, as Trump will not want to be seen as having caved in.

“What he’s shown the Chinese is he’s willing to touch the ‘third rail’ of U.S.-China relations,” said Dean Cheng, China expert at the conservative Heritage Foundation in Washington.

“Beijing can’t predict what he’ll do next – and he’s only been in office three weeks. What is he going to do on trade and other economic issues?”

U.S. officials said the affirmation of the “one China” policy was an effort to get the relationship back on track and moving forward.

But Trump’s change of tack may be seen by Beijing as a climbdown, said Tom Rafferty, the China Regional Manager for the Economist Intelligence Unit.

“Mr Trump is erratic and will not appreciate the suggestion that he has been weak.”

(Additional reporting by Michael Martina, and J.R. Wu in Taipei and Matt Spetalnick in Washington; Editing by Raju Gopalakrishnan)

IMAGE: A combination of file photos showing Chinese President Xi Jinping (L) at London’s Heathrow Airport, October 19, 2015 and U.S. President Donald Trump posing for a photo in New York City, U.S., May 17, 2016. REUTERS/Toby Melville/Lucas Jackson/File Photos

Hitting Our Heads Against A Useless Border Wall

Hitting Our Heads Against A Useless Border Wall

Illegal immigration from Mexico is yesterday’s problem. Last year, more Mexicans left the United States than entered, according to the Pew Research Center. But if Donald Trump were to follow through on threats to ditch or decimate the North American Free Trade Agreement, illegal immigration from Mexico would become tomorrow’s problem.

Just his mouthing off on imports from Mexico has sent the Mexican peso cratering. That means Mexican products have already become cheaper in the U.S. market, making them more competitive. It also makes crossing the border for jobs paid in U.S. dollars more attractive.

Ah, but won’t that “beautiful” wall keep immigrant workers out? It will not. As long as U.S. employers can get away with hiring cheaper undocumented labor, they will. Trump himself knowingly employed undocumented workers in the building of Trump Tower. They flew over from Poland.

Building a wall along the Mexican border is pure theater. If the objective is to keep terrorists from invading the country in the dead of night, then a wall with Canada would make just as much sense.

One must sympathize with ranchers along the southern border plagued by drug cartels crossing their properties. But they see the actual building of a wall as a joke. In the words of one Arizona rancher (and no fan of Hillary Clinton’s): “That is the most idiotic thing I’ve ever heard.”

Enterprising criminals could quickly bulldoze or dig under such a barrier. Round-the-clock surveillance by the Border Patrol might stop them, but then, you wouldn’t need the wall.

Today’s border-crossing migrants are most likely to be fleeing brutal violence and extreme poverty in El Salvador, Guatemala, and Honduras. Most don’t want to sneak in at all, but instead put in claims for political asylum. That’s something they can do at official entry points in cities such as Laredo and El Paso, Texas.

Trump’s target audience for assaults on free trade, U.S. factory workers, would get little out of strangling trade with Mexico. Automakers and other manufacturers now rely on supply chains whereby their U.S. factories use parts and supplies made in lower-wage countries — and vice versa. This shared manufacturing enables companies to compete in world markets while employing high-paid labor here. (That said, automation is claiming jobs everywhere.)

This hasn’t gotten much national attention, but a round of trade wars would visit misery on our farm economy. For example, the U.S. is by far the world’s biggest exporter of corn, much of it headed to Asia and Latin America. Mexico happens to be the third-biggest foreign market for U.S. dairy and meat products.

The National Cattlemen’s Beef Association reported that American cattle producers were losing about $400,000 in sales every day the Trans-Pacific Partnership was not enacted. Trump just killed U.S. participation in that trade agreement. (Its members would have represented about 40 percent of the world’s economy.)

“TPP and NAFTA have long been convenient punching bags,” association president Tracy Brunner complained, “but the reality is that foreign trade has been one of the greatest success stories in the long history of the U.S. beef industry.”

An inescapable political note is that the farm belt overwhelmingly voted for the man who threatened its biggest foreign markets. You can’t blame Trump for this. He never wavered in his hostility to the big trade agreements that have benefited or could greatly benefit U.S. agriculture.

Back at the border, the wall will cost many billions while doing little to solve immigration and security problems. Rather, it will serve as a taxpayer-funded stage set for Trump whenever controversy pays a call and he needs a distraction. We’d better get used to this sort of thing.

Follow Froma Harrop on Twitter @FromaHarrop. She can be reached at fharrop@gmail.com. To find out more about Froma Harrop and read features by other Creators writers and cartoonists, visit the Creators webpage at www.creators.com.

IMAGE: A general view shows a newly built section of the U.S.-Mexico border wall at Sunland Park, U.S. opposite the Mexican border city of Ciudad Juarez, Mexico, November 9, 2016. Picture taken from the Mexico side of the U.S.-Mexico border. REUTERS/Jose Luis Gonzalez/File Photo

Trump To Sign Orders To Renegotiate NAFTA, Pull Out Of TPP

Trump To Sign Orders To Renegotiate NAFTA, Pull Out Of TPP

ASHINGTON (Reuters) – U.S. President Donald Trump could sign an executive order as early as Monday intended to renegotiate the free trade agreement between the United States, Canada and Mexico, NBC News reported, citing an unidentified White House official.

In addition to wanting to renegotiate the North American Free Trade Agreement (NAFTA), the new Republican president also intends to sign an executive order pulling out of the Trans-Pacific Partnership (TPP), NBC reported.

Trump, who was sworn in as the 45th U.S. president on Friday, targeted both trade pacts during his White House campaign.

Officials were not immediately available to confirm the report to Reuters. Trump’s official schedule includes a 10:30 a.m. EST (1530 GMT) signing of executive orders in the Oval Office.

The president said on Sunday he planned talks soon with the leaders of Canada and Mexico to begin renegotiating NAFTA.

“We will be starting negotiations having to do with NAFTA,” Trump said at a swearing-in ceremony for his top White House advisers. “We are going to start renegotiating on NAFTA, on immigration and on security at the border.”

Trump said during the campaign he wanted to secure more favorable terms for the United States in the NAFTA pact.

NAFTA, which took effect in 1994, and other trade deals became lightning rods for voter anger in the U.S. industrial heartland states that swept Trump to victory.

CNN reported the first executive action Trump intended to sign was to pull out of the TPP, the trade agreement among 11 Pacific Rim countries that Democratic President Barack Obama strongly backed but was never ratified by the Republican-controlled Congress.

(Reporting by Roberta Rampton and Ayesha Rascoe; Writing by Doina Chiacu; Editing by Chizu Nomiyama and Jeffrey Benkoe)

IMAGE: U.S. President Donald Trump attends a swearing in ceremony for senior staff at the White House in Washington, DC January 22, 2017. REUTERS/Carlos Barria