Trump's Trade Doctrine
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Most
shoppers prefer to buy American. But given a choice between an
American-made product and a cheaper import from China, Mexico or another
low-wage country, they'll go for the bargain. That's one reason
millions of American factory workers have lost their jobs.
In last year's presidential election, Donald Trump
put the collapse of American manufacturing center stage. He pledged to
take on China—our biggest trade rival—and
to rip up the North American Free Trade Agreement with Mexico and
Canada. He told rallies in Indiana and Pennsylvania that "we cannot
continue to allow China to rape our country" and "there are no jobs
because China has our jobs." He warned upstate New Yorkers they were
being "horribly, horribly hurt by NAFTA."
Just campaign rhetoric? Hardly. Last week,
President Trump launched an investigation into China's trade practices.
This Wednesday, the Trump administration begins renegotiating NAFTA.
The departure of White House strategist Steve
Bannon last week was predicted to end what the media disparagingly call
"economic nationalism." Don't believe it. Trump railed for years against
unfair trade treaties. Commerce Secretary Wilbur Ross, and U.S. Trade
Representative Robert Lighthizer share Trump's long-held view.
Lighthizer said on Friday, "NAFTA has fundamentally failed many, many
Americans and needs major improvement." He's promising dramatic changes
to NAFTA, not just "tweaks."
Most economists claim global trade is good for
America because it keeps prices low, offers consumers more choices and
opens up overseas markets for U.S. businesses and farms to sell their
products. That's been the rationale for free trade for two centuries,
ever since Scottish philosopher Adam Smith famously argued that the
global marketplace's "invisible hand" would benefit all. It hasn't
worked out that smoothly. American manufacturing workers are getting the
back of Smith's invisible hand.
President Clinton's adoption of NAFTA and the
massive influx of Chinese goods after China was admitted to the World
Trade Organization in 2001 clobbered American workers, causing over 2
million layoffs in less than two decades, according to MIT economist
David Autor. New York State alone lost 34,000 jobs due to NAFTA.
Politicians who boasted about these deals kept mum about catastrophes
ahead for workers.
Chinese imports forced furniture factories in
Hickory, North Carolina, to close, putting that community into an
economic tailspin. More than three-quarters of the furniture sold in the
U.S. now is made in China.
Of course, factory layoffs are only partly caused
by trade. Automation is allowing manufacturers to produce more products
with fewer workers. Yet it's almost impossible to buy furniture, or a
smartphone, laptop computer, Christmas ornaments, furniture or clothes
made in America.
Apple is the biggest American corporation, based
on stock value. But parts for its smartphones come from all over Asia,
and the phones are assembled by Taiwanese companies.
Wall Street investors tremble about a trade war
that would hurt S&P 500 companies like Apple and General Motors,
which sells more vehicles in China than in the U.S. But autoworkers,
including many Trump voters, are pushing for American-made batteries and
more American steel in cars, even though it will push up the sticker
price, making Detroit less competitive.
That is Trump's trade conundrum. Trade barriers that benefit one interest hurt another.
Past politicians haven't leveled with the public
about trade. President Bill Clinton bragged letting China into the WTO
would "have a profound impact on human rights and political liberty."
Nonsense. China has become more repressive. China is stealing
intellectual property, and even worse, plotting to control the supply of
semi-conductors, electronic elements needed for weapons and other
defense equipment. That puts America in peril.
Trump dared to question the gospel of free trade
and changed the national discussion. Over three-quarters of Trump
voters, including lifelong Democrats, believed the pacts were hurting
America, and they've given Trump a mandate to act. Expect major trade
law changes, driven by these voters, as well as the need to thwart
Chinese aggression.
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Saturday, August 26, 2017
NEWS: Trump for the American Workers
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