Reader Ken asked me the other day my opinion of Donald Trump’s position on trade and I admitted that I hadn’t heard anything about it. So the above-linked Reuters article intrigued me.
I’ve never been sure of what to make of Donald Trump. Sometimes I love the guy. Often I’m suspicious of him. Sometimes he repulses me. You have to admire his work ethic and can’t argue with his success in the business world. On the other hand, his habit of marrying trophy wives, fathering a child or two with each and then casting them aside like last year’s Bentley isn’t an endearing trait. But then, regarding his kids, it’s hard to draw accurate conclusions from the few interviews I’ve seen, but it seems he’s done an outstanding of job of raising intelligent, proper, well-mannered well-spoken kids – something that seems to be a source of pride to him. But, like everything he says, you’re left wondering if he’s being genuine or saying and doing what’s in the best interest of his image.
And so it is when he expresses a deep love for America. Is it genuine, or is it what serves him best at the moment? When he says he’s interested in running for president, is it another self-serving, attention-grabbing ploy to pump up the ratings of his reality show or would he really do it?
Let’s take him at his word and assume he’s serious about running. If you’ve been a reader of this blog, you know that in my mind there are two issues that dwarf all others: trade and immigration. There’s nothing in this article about his views on immigration, nor have I heard or read any elsewhere. I’m suspicious that he may be a big immigration advocate, but have nothing to support that. But there’s plenty in this article regarding trade, which can be summed up with these quotes:
Under a President Trump, China would be forced to end currency manipulation or face a 25 percent tariff on all exports to the United States. OPEC oil-producing nations would have to drop the price of a barrel or oil to $40-50 or face America’s wrath. And Arab nations and South Korea would pay for benefiting from America’s military might.
He singled out the recent trade pact with South Korea, signed after a military showdown with communist-ruled North Korea, saying it was a “joke” with insufficient benefits for the United States.
… “I would put a 25 percent tax on all goods coming in from China to the United States and I would do it without hesitation,” Trump said.
“I would tell (OPEC) that oil is not going to $150 a barrel … it’s going to be at $40-50 a barrel.”
First of all, regarding China, this is really nothing more than Obama promised, but done with a little more bluster. Obama promised to label China a currency manipulator which, under World Trade Organization rules, paves the way for punitive tariffs against them. There’s just one problem. (Well, two, actually.) What exactly is “currency manipulation?” For every example you might cite, someone else could provide an example of something worse done by the U.S. Besides, the Chinese yuan has been rising – slowly, but rising nonetheless.
Which leads us to the other problem with this approach. Undoubtedly, faced with such a threat, China will let the yuan appreciate a little faster to make The Donald happy. So what? Since June of 2005, the Chinese yuan has risen in value by 25%, making Chinese imports more expensive while making American exports more affordable. But instead of improving, our trade deficit with China has actually worsened by 29%!
Some economists say that’s because the yuan hasn’t strengthened enough – it needs to appreciate by 40% to have an effect. So, we’re to believe that while an appreciation of 25% has had the opposite effect on trade, an additional appreciation of another 15% will completely reverse all of this and actually restore a balance of trade? Give me a break! The fact is that currency exchange rates have nothing to do with trade imbalances, yet this would be the cornerstone of Trump’s trade policy.
Regarding his approach to OPEC and oil prices, this illustrates the problem with Trump or anyone else with an entrepreneurial spirit, used to demanding and getting their way, in a role of national leadership where diplomacy and compromise are required. We have absolutely no leverage regarding the price of oil. Our only choice is to pay the price or walk away. But The Donald would threaten them with facing some sort of “wrath.” What exactly would that be? Would we attack them? I doubt it. Would we withdraw military support? That would only force them to cozy up to China. Want to have a real impact on the price of oil? Start talking about plans to reduce our population to a level that could be supported by domestically produced oil alone.
Then there’s the whole issue about Obama’s place of birth. It’s blatant pandering to the far right that simply won’t work with moderates and independents. It makes him seem more like a conspiracy theory nut than someone who’s presidential. But he’s never had to worry much about what he says. He’s The Donald. If he says “jump,” his lackeys ask “how high?”
Finally, there’s this:
… his message that America needs radical change draws support from some voters dismayed by diminished economic prospects at home and growing challenges to U.S. power abroad.
“Radical change.” Oh, boy. Where have I heard that before? Seems like there was a lot of talk about that in ’08. Has anybody seen any, at least for the better?
Don’t get me wrong. I could see myself voting for the guy. Obama has already proven that his talk of addressing our trade deficit was just campaign rhetoric. Trump’s probably is too, but at least with him there’s still the chance that he might actually do it. And I’m sure that there’d never be a dull moment for the next four years. It might actually be entertaining. At least when things didn’t go well, heads would roll with a little more flair. “You’re fired!”