In the wake of the Obama administration, it still makes me nervous any time the president sits down for talks with a foreign leader. For Obama, there were no concessions too big for him to make. Foreign leaders played him like a fiddle. Americans came out the losers every time. I say this as one who had big hopes for Obama and voted for him in 2008.
As reported in the above-linked Reuters article, Chinese President Xi Jinping travels to Florida this week to meet President Trump at his Mar-a-Lago resort. The media will be focused on dealings aimed at reining in North Korea’s nuclear ambitions. But the real story will be their talks on trade. America’s failed trade policy is far and away the biggest contributor to our economic decline. All of our economic problems and virtually every other problem that is impacted by monetary resources allocated to deal with it can be blamed on our trade deficit. The budget deficit, nearly all of our national debt, our crumbling infrastructure, our health care crisis, homelessness, poverty …. you name it, they’re all directly linked to the drain of our financial resources wrought by the trade deficit. And no country is more responsible for that drain than China, who accounts for nearly one half of the entire deficit.
On Friday, the U.S. president sought to push his crusade for fair trade and more manufacturing jobs back to the top of his agenda by ordering a study into the causes of U.S. trade deficits and a clamp down on import duty evasion.
If the President is truly interested in the cause of U.S. trade deficits, he need look no further than this blog and can learn all he needs to know by reading Five Short Blasts. Nations who come to the trading table with nothing to offer but bloated labor forces and markets emaciated by gross overcrowding are the cause of trade deficits. By this criteria, China is the worst of the worst. Only tariffs (or a “border tax,” if that term is less onerous) can maintain a balance of trade when dealing with such countries. Negotiations are pointless since the only possible outcome is to trust the other side to take actions to rein in their appetite for our market. Decades of experience since the beginning of the failed experiment with “free” trade has proven that they won’t.
So far, President Trump has proven that, for the most part, he can be trusted to follow through on his campaign promises. No promise was bigger than getting tough with China on trade. It seems that Germany’s Angela Merkel found him to be a very different president from Obama in her recent meeting with Trump. Hopefully, he’ll be just as tough on Xi. It seems that Trump’s “border tax” idea is now becoming more accepted as a crucial element of his upcoming tax reform plan. Let’s hope he doesn’t negotiate away any of it this week.