Editorial

Trump’s Twitter Trade Wars

Donald Trump has brought attention to trade issues, but, as we feared, he has given tariffs a bad name by waging trade wars via Twitter, mainly to distract from his problems elsewhere.

The trouble goes back to his March 2, 2018, tweet, a day after he announced steep tariffs on imports of steel and aluminum, when he blithely stated, “When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore — we win big. It’s easy!”

In announcing the tariffs of 25% for foreign-made steel and 10% for aluminum, Trump didn’t distinguish between American allies among industrialized nations, such as Canada, Mexico and the European Union, and nations that are known to dump steel into the US market, such as China, Brazil, South Korea, Russia and Vietnam. Many of the nations subjected to Trump’s tariffs responded by putting tariffs on American goods, including agricultural products.

In May, Trump raised an existing 10% tax on many Chinese imports to 25% when talks that were supposed to de-escalate the trade war collapsed. China responded by raising its own tariffs on many American imports, including agricultural products. That has pushed many farmers into financial peril who have come to depend on the Chinese market. Then Trump started talking about taxing an even wider range of Chinese products (and insisting China would pay the tariffs, ignoring the fact that American consumers would pay the tariffs).

Global finance leaders meeting in Japan in early June said they were increasingly worried that the trade dispute between the US and China, which shows no signs of abating, could propel the world economy into a crisis, the New York Times reported June 9.

It doesn’t help that Trump is known to act impulsively, he exaggerates and lies, and he has a reputation for reneging on deals. For example, on May 30 he threatened to place tariffs on Mexican products if Mexico didn’t agree to stop Central American migrants from getting to the US southern border. Never mind that those arbitrary tariffs would violate the spirit of the North American Free Trade Agreement rewrite that Trump’s negotiators had reached with Mexico and Canada last year.

Trump appeared to back down on the Mexico tariffs June 7, after Republican officials and business leaders in border and battleground states that do business with Mexican industry complained that imposing tariffs on Mexican goods — taxes that would be paid by American businesses and consumers — would harm them. Trump abruptly announced that Mexico agreed to “deployment of its National Guard throughout Mexico, giving priority to its southern border.” But the Mexican government had already pledged to do that in March during secret talks in Miami between Kirstjen Nielsen, then the secretary of homeland security, and Olga Sanchez, the Mexican secretary of the interior, officials told the Times.

The centerpiece of Trump’s deal with Mexico was an expansion of a program to allow asylum-seekers to remain in Mexico while their legal cases proceed. But that arrangement was reached in December in a pair of painstakingly negotiated diplomatic notes that the two countries exchanged, the Times noted. Nielsen announced the Migrant Protection Protocols during a hearing of the House Judiciary Committee five days before Christmas.

Trump hailed the supposed “new deal” anyway on June 8, writing on Twitter: “Everyone very excited about the new deal with Mexico!” He thanked the president of Mexico for “working so long and hard” on a plan to reduce the surge of migration into the United States.

As Michael D. Shear and Maggie Haberman wrote in the Times (June 8), with a touch of journalistic diplomacy, “It was unclear whether Mr. Trump believed that the agreement truly represented new and broader concessions, or whether the president understood the limits of the deal but accepted it as a face-saving way to escape from the political and economic consequences of imposing tariffs on Mexico, which he began threatening less than two weeks ago.”

Trump also tweeted (all caps), “MEXICO HAS AGREED TO IMMEDIATELY BEGIN BUYING LARGE QUANTITIES OF AGRICULTURAL PRODUCT FROM OUR GREAT PATRIOT FARMERS!” There apparently is no such deal, but the New York Times’ Paul Krugman noted, “For what it’s worth, my guess is that Trump vaguely remembered the terms of an abortive trade deal with China, which he claimed included a commitment by China to buy five million tons of US soybeans. If my guess is right, Trump is confusing Mexico with China, and has forgotten that talks with China have broken down. Not a good look for the man with his finger on the nuclear button, but whatever.”

On June 10, stung by reports over the weekend that his “deal” with Mexico contained nothing new, Trump said the US is working on a second deal with Mexico to curb migration to the US. If the Mexican government fails to sign on, Trump warned, new tariffs will be imposed on Mexico. But according to Mexico, this second deal doesn’t exist either.

Trump’s reckless behavior on trade policy isn’t good for American workers, businesses or farmers, but Democrats would be unwise to return to a “free trade” attitude, whose excesses made Trump’s con sound appealing to Rust Belt workers who were concerned by the constant flow of manufacturing jobs out of the United States.

Public Citizen’s Global Trade Watch, which has been promoting a progressive rewrite of NAFTA, said the replacement pact that Trump sent to Congress falls short. The revised text in the fall of 2018 revealed some improvements that progressives have long demanded, such as a rollback of Investor-State Dispute Settlement. “But NAFTA 2.0 also includes unacceptable new powers for pharmaceutical firms to keep medicine prices high. And critically, more work is needed to strengthen labor and environmental standards and ensure their swift and certain enforcement.”

The AFL-CIO labor federation was more blunt: “The new NAFTA is another corporate handout. It won’t stem the outsourcing of good jobs or protect the rights of working people. Tell Congress the new NAFTA isn’t good enough and to refuse to vote on it.”

Sen. Elizabeth Warren on June 4 unveiled a progressive Plan for Economic Patriotism that would put national resources, such as government spending on research and development, tax subsidies and export incentives behind emerging industries, while making sure the nation’s workers get the resulting jobs.

Warren said American wages have remained flat and jobs have moved overseas since the 1980s, in part, because “America chose to prioritize the interests of capital over the interests of American workers.”

“The truth is that Washington policies  —  not unstoppable market forces  —  are a key driver of the problems American workers face. From our trade agreements to our tax code, we have encouraged companies to invest abroad, ship jobs overseas, and keep wages low. All in the interest of serving multinational companies and international capital with no particular loyalty to the United States.

“In my administration, we will stop making excuses. We will pursue aggressive new government policies to support American workers.”

Tariffs would remain an option for Warren, but she said, “our principal goal should be investing in American workers rather than diminishing our competitors.” — JMC

From The Progressive Populist, July 1-15, 2019

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