Why Trump’s trade policy is dangerously simplistic
So far, President Donald Trump’s actions on trade display a dangerously simplistic view of the world and overconfidence in his own abilities as a dealmaker.
Instead of putting America first, he is putting our economy and security at risk.
Take the Trans-Pacific Partnership, which Trump withdrew from Monday as his first significant executive action. Trump and his top advisers have taken a hard line on China, accusing it of stealing American jobs.
But the TPP was designed to counter China’s economic, military and political influence in Asia and to let the U.S. lead on setting trade rules for the region. The Obama administration purposely excluded China, but included 11 other Asia-Pacific nations that account for 40 percent of the global economy. They include Canada and Mexico, key allies such as Australia and Japan and emerging economies such as Malaysia and Vietnam.
Trump’s decision was, in a sense, symbolic. He, Hillary Clinton and Bernie Sanders all opposed the TPP during the 2016 campaign. There probably wasn’t enough support in Congress to ratify it. But hubris has been the downfall of many leaders, and there is no guarantee that Trump can negotiate better bilateral deals with the TPP countries. In the meantime, he risks creating a vacuum that China is only too happy to fill. China already is pushing an alternative Asia trade pact that leaves out the U.S.
Or consider Trump’s plans to rip up the North American Free Trade Agreement and renegotiate its terms with Canada and Mexico.
While the 1993 agreement has cost U.S. factory jobs, it boosted Mexico’s economy, and that in turn helped reduce the number of illegal immigrants crossing the border. As Mexico became wealthier and as the U.S. suffered through recession, 140,000 more people returned to Mexico than entered the U.S. between 2009 and 2014, studies show.
To discourage illegal immigration, a Mexico that is prosperous enough to support its citizens is much more effective than building a wall. Trump doesn’t seem to understand that.
Nor does he seem to fully comprehend how much is at stake for California. Canada and Mexico are the state’s two largest trading partners, China ranks third and Asian nations are significant and growing markets. TPP included many positive provisions, including intellectual property protections sought by Hollywood and Silicon Valley and lower tariffs wanted by California’s farmers.
Trump should listen to one of his own economic advisers during the campaign, Stephen Moore of the Heritage Foundation, who said Tuesday on National Public Radio that if China takes advantage of the demise of TPP it would be “a disaster” and that he’s uneasy about tearing up NAFTA because Mexico’s economy is fragile. Moore also cautioned against protectionist policies that could spark a trade war that would devastate the entire world economy.
Trump will believe he’s a success if he brings manufacturing jobs back to the Rust Belt. But if that comes at the expense of high-tech jobs in California and elsewhere, it is a failure. And if his trade policies result in China’s supremacy in Asia and an unstable Mexico at our border, it won’t make America great again.
This story was originally published January 24, 2017 at 2:27 PM with the headline "Why Trump’s trade policy is dangerously simplistic."