- Nov 2017
- FL Treasure Coast & South Central FL
President Trump has stated on numerous occasions that he wants to increase trade. Under his wise rule, he assures us, American trade will thrive. It will be Yuge! Why would anyone doubt that desire? He’s a businessman and businessmen want to do more business not less. In pursuit of this, Trump has also said that that he favours a low or no tariff world, but that it must be based on reciprocity – an easily understandable form of fairness but one which has earned Trump scorn from right, left, and centre.
The subject came up at a dinner I attended recently. It was mostly populated by right of centre journalists and intellectuals, but there were a few people from the business world there too. When the topic turned to Trump’s trade policy, several of the card-carrying representatives of the local chapter of Conservatism, Inc. expressed a warm disdain for what they understood to be Trump’s free-trade heresy. But were they right? The business tycoons, to a man, disagreed. Rather they saw in Trump’s rhetoric and actions a clearly defined policy of expanding trade on terms favourable to the American people. And this, the businessmen agreed, was a worthy goal. The theorists didn’t seem to get it.
But Trump does. He understands what the intellectuals and journalists whose livelihoods do not depend upon it don’t: trade is good to the extent that it promotes and expands national prosperity.
Free government is predicated upon a strong, self-sufficient middle class. Trade can support this, but for the past generation it has done just the opposite, impoverishing the middle class and exporting wealth to the developing world. This is not just an economic loss, it is a political threat to the stability of the regime. Trump knows this at a visceral level: the object of any business deal is to turn a profit. He’s looked at American trade policy and seen, correctly, that it’s been booking losses for the country and for the middle class for years while enriching a tiny elite that has positioned itself to benefit from the beggaring of the nation.
Free trade – that amorphous, barely defined term, like evangelical or sexy – is not an end in itself. It is a means. And it is this critical distinction that eludes many American conservatives of the old order. In the post-1945 period free trade was not only a means of reviving European economies devastated by war, it was a means of knitting together more closely the Western allies who still faced a potentially existential threat from expansionist Soviet communism. But those days are behind us and it’s time to return to first principles on trade. Sovereign nations must pursue their own interests and the prosperity of their people.
Trading jobs for cheap, made-in-China toasters at Walmart is bad policy. Somehow, the entire political establishment in America – from centre-right to centre-left – was seduced into believing that the liberal political order could be reduced to doctrinaire adherence to notions of free trade that exist only in economics textbooks. The real world is messier. And Trump understands it. He has taken a rhetorically hard line with American trading partners that have grown rich by impoverishing American workers but has, at the same time, floated proposals for greatly expanded trade relations with the post-Brexit UK.
Nonetheless, President Trump’s push to renegotiate trade deals is often described in the click-hungry press as a ‘trade war’ and media coverage, left and right, often breathlessly predicts imminent doom. On the hard left, The Nation warns that ‘Donald Trump’s Trade War Could Lead To The Next Great Depression’ while the right of centre National Review warns that trade wars ‘are impossible to win’ and that Trump’s trade policies are ‘political suicide and economic malpractice.’
That’s the wisdom dispensed by the commentariat. But what’s happening in the real world? Despite solemn predictions of the coming apocalypse, Donald Trump’s steady pursuit of profitable trade has already yielded salutary results that his many critics should not just note, but applaud.
His tough negotiating stance had led to a renegotiation of NAFTA with Mexico’s incoming socialist president that, among other things, benefits American agriculture, protects intellectual property rights, and includes what the White House calls ‘the strongest, fully enforceable labour standards of any trade agreement.’ This bilateral success encouraged Canada’s Trudeau government back to the negotiating table lest they be left out. That’s a win for America and a win for trade.
Trump also struck a deal with the Eurocrat-in-Chief Jean-Claude Juncker which improved US-EU trade relations. That agreement, announced in June, included the pursuit of zero tariffs on non-auto industrial goods and in reducing tariffs on other sectors including pharmaceuticals and chemicals. This is in keeping with Trump’s stated policy of reciprocity. In March, Trump successfully renegotiated the trade pact with South Korea on favorable terms which include increasing by 50,000 the number of cars each US manufacturer may export to South Korea each year. But Trump still gets no credit.
Yet, the impact of his economic program, of which trade policy is one component can already be seen in the booming US economy. The US economy grew by 4.1 per cent in the second quarter and unemployment sits at an all-time low 3.9 per cent. Likewise black and Hispanic unemployment numbers are also at all-time lows. What’s more ‘goods producing jobs’ – the category which includes construction, mining, and manufacturing – saw growth of 3.3 per centfor the year ending in July which is the highest since 1984, the year Ronald Reagan famously declared it ‘morning in America’ on his way to a landslide re-election. And real wage growth, which has mostly eluded the U.S. economy over the past 40 years, ticked up by 0.5 per cent in August.
Put these things together and one begins to see a picture of national prosperity like the one Trump promised in 2016. Though he might not affirm the ruling class orthodoxy on free trade theory, Trump’s common-sense policies grounded in fairness and the desire to get the best deal possible for American and his real-world negotiating skills have yielded economic success that eluded both Bush and Obama. For the middle class, that doesn’t make Trump a heretic, it makes him a hero.