It’s been a while since I’ve posted anything, and thought it’d be a good time to give President Trump a sort of mid-term report card, albeit a little late. I’ll grade him in two subjects only – immigration and trade policy – since these two areas address the economic effects of population growth, both actual growth the effect of growth imported through trade with overpopulated nations, the focus of this blog. Beyond these, little else matters. What about environmental policy? Without a focus on stabilizing our population (and virtually all of America’s population growth is driven by immigration), all other environmental policies are doomed to failure. What about foreign policy? It’s impossible to project strength in the world if you’re weak on trade.
So, with that said, let’s begin with the good news:
Immigration Policy: A+
Trump has done a fantastic job on both illegal and legal immigration, each of which had been contributing a million people per year to America’s population growth. Thanks both to Trump’s zero tolerance policy for illegal immigration and dramatic cuts in legal immigration, the Census Bureau reduced its estimate of the U.S. population by 1.3 million people at the end of 2018. He spent a lot of political capital in his efforts to get funding for a border wall and, when Congress wouldn’t agree, had the guts to declare a national emergency to obtain the funds. “What emergency?” the media cried at first, but not for long, when their own reporters in the field began reporting on the humanitarian crisis at the border that resulted from the adminstration’s efforts to enforce the law instead of turning a blind eye to illegal immigration as previous administrations have done. Now there’s virtually no complaints about Trump’s enforcement efforts or his emergency declaration. His policies are likely responsible for the fact that increases at the low end of the wage scale are outpacing higher income increases. Recently, during a trip to the southern border, Trump declared that “Our nation is full.” Truer words were never spoken. Ultimately, this is the biggest reason that immigration needs to be reduced. Trump has done an absolutely fantastic job of reining in out-of-control immigration.
That’s the good news. Now for the not-so-good:
Trade Policy: D
Such a low grade may seem surprising and harsh, especially in light of the tariffs on metals and his seemingly tough position with China, including a 25% tariff on some items and a 10% tariff on half of all Chinese imports. However, it’s those very actions that elevate his score to a “D” from an “F”, the score I’d give to every previous president going as far back as Franklin Roosevelt. They’ve been a nice start, but fall far short of what we were led to expect from him in the way of trade policy. Like all previous presidents of the modern era, Trump has been sucked into endless trade negotiations, a ploy that nations with large trade surpluses have used successfully for decades to forestall meaningful action by the U.S. – namely, tariffs. We were promised that the North American Free Trade Agreement (NAFTA) would be torn up or promptly replaced. Trump’s administration did negotiate a new agreement, but one that reportedly does little to shrink the enormous deficit with Mexico and it may never even be enacted, if Congress has its way.
Action on China is stalled. Tariffs on auto and parts imports now appear to be idle threats. Beyond China, there’s been no action on reducing the trade imbalance with other nations like Germany, Japan, South Korea, Taiwan, Vietnam and a host of others. The trade deficit in manufactured goods has continued to explode to new record levels under Trump. Employment in manufacturing has stalled once again. Trump sees trade as a venue for demonstrating his deal-making prowess, and he sees tariffs as leverage to use in trade negotiations. He doesn’t understand that favorable “deals” with overpopulated nations are impossible and a waste of time, and that tariffs are the only way to restore a balance of trade with those nations. Regarding the ongoing trade negotiations with China, he recently declared that the U.S. will win, whether a deal is reached or not. He’s wrong. The Chinese have already won by sucking him into time-wasting talks that, at best, will yield a deal that the Chinese will use to continue to grow their trade surplus with the U.S. He had them on the ropes with the tariffs and then caved in, letting them off the hook.
In summary, Trump’s trade policy is stalled and our trade deficit is getting worse, not better. This has been a major disappointment. He’s wasted valuable time. As I’ve said many times, a tariff program will produce some pain in the short term as prices rise and companies are slow to build manufacturing capacity in the U.S., but will ultimately yield incredible economic growth once that capacity is in place. Had Trump been more aggressive with tariffs, the short term pain would have given way to some major economic gains by the time of the 2020 election. Now, that’s probably not possible and, instead, his economic program is at risk of stumbling into the election.
He’s done a terrific job on immigration but all may be lost if he doesn’t get his trade policy off dead-center.