Trump’s Job No. 1: Recoup the Jobs, Wages and Security Lost to Trade Deals
President-elect Trump’s choice of Robert Lighthizer as his special trade representative, announced Tuesday afternoon, completes the first string of the new administration’s trade team. So it’s time to draw a couple of clear conclusions.
Conclusion No. 1: Trump is a dead-serious hawk on trade questions—all in for everything he promised on the campaign trail. Prominent among these promises is a remake of economic relations with China and a halt to the southward drain of American jobs—“the giant sucking sound,” as Ross Perot put it during his 1992 presidential run—to Mexico.
Conclusion No. 2: Trump’s trade hawks have three alternatives: They can learn on the job and backtrack on the campaign pledges, they can limit themselves to jawboning and gestures, or they can sustain bloody noses.
There is one other possibility: Trump’s trade team can make an unholy mess of the U.S.–China relationship altogether if they take their animus too far and disputes spill into already-fraught security questions.
What Trump will not be able to do, for better or worse, is fundamentally alter the structure of U.S.–China trade or Mexico’s role as a low-cost manufacturing platform. Encouraged by the U.S. in the first place, too many people here and there benefit from these arrangements to alter them now.
Lighthizer, a protectionist from way back, has a decades-long record as a China-basher. When he served as President Reagan’s deputy S.T.R. in the 1980s, Japan was Public Enemy No. 1 and Lighthizer’s office wielded threats of import quotas and punitive tariffs—the latter now prominent on Trump’s menu.
Lighthizer joins Wilbur Ross, commerce secretary-designate, and a practiced hand at Rust Belt salvage jobs, and Peter Navarro, head of the newly created National Trade Council and another hard-liner on trade. Navarro, a University of California economist, is noted for his 2012 documentary, “Death by China.”
Some near-term successes are in store for this crew. Trump’s on the record opposing the sweeping trade deals negotiated under Presidents Clinton and Obama, and they’re both vulnerable to one or another degree.
Obama’s Trans–Pacific Partnership, ambitious to a fault and structured in secret by the corporations that would have benefited from it, is all but a dead letter already. Clinton’s North American Free Trade Agreement— Trump called it “the single worst trade deal ever approved in this country” during the debates last year—is plainly in Trump’s sights.
On this score Trump is right. Even the Mexicans now acknowledge NAFTA simply hasn’t delivered many of its promised benefits. As to the TTP, look at it carefully—to the extent one can—and it is less a trade deal than a sweeping deregulation regime that will prove as much a letdown as its predecessor.
Trump’s pulling a Ross Perot act, in effect—saying the unsayable. These accords are structured to benefit corporations at the expense of jobs, wages, and workplace security on both sides of the border. It won’t do—as Trump’s stunning victory last November 8 has just advised us.
Scrapping the TTP will actually do relations with Beijing some good, given the Obama administration wielded it as an economic weapon intended to isolate the Chinese. As to NAFTA, Team Trump will have to limit its ambitions to adjustments, and even those that are justified are likely to prove hard to make.
The big problem with Trump’s aggressive position on China is very simple: China’s not the problem. America’s traditional short-sightedness is the problem.
When Deng Xiaoping’s reforms unleashed pent-up energies in the early 1980s, U.S. companies piled in big time. Here was a low-wage production platform from which they could export to developed markets, including their own. Complex supply chains and multiple-site assembly operations now make a very dense weave.
Americans did the same thing in Japan after the 1945 victory, and by the 1980s—Lighthizer’s time in the Reagan administration—the strategy was biting U.S. companies on their backsides. Imbalances in the economic relationship with China are nothing more than a not-quite-instant replay of earlier events across the Pacific.
The lessons then are the lessons now.
First, Washington can ask the Chinese to make ameliorating adjustments at the margins, but China will never abandon its fundamental growth strategy, which is to export into prosperity while the domestic market begins to mature.
Second, America has to make the serious adjustments. China’s economic rise has cost the U.S. jobs while treating the American workforce with benign neglect. The government invested too little in education and compensatory retraining programs, to name two.
Now, it’s worth noting, we’re sending overseas a lot of the higher-tech jobs workers who lost their jobs to Deng’s reforms. There’s no laying any of this off on China.
Let Team Trump shout loudly, save some jobs as the President-elect has with Carrier and now Ford, and tell the folks back home, “I’m tryin’ my best.” A sophisticated ambassador in Beijing can smooth the ruffles at the other end.