During his Make America Great Again campaign, President Trump promised to bring factories and jobs back to the USA by being “smarter” and “tougher” than our trading partners, who had been “ripping us off for years.” He was right that unfair trade had hollowed America’s manufacturing base and hurt working-class Americans, and his tough talk has been worthy of a wise guy from Queens. However, it is uncertain how smart Trump’s approach is, especially after proclaiming himself a nationalist. Ouch!
Most, if not all, business leaders believe Trump is trying to protect America’s economic preeminence, but many think his constant complaining makes America look petty, and his bare-knuckles negotiating style invites a backlash against US multinationals (such as Apple). Most, if not all, business leaders know why Trump is using tariffs, but many wonder if his is the best approach for today’s trade reality. The risk to America is obvious: reckless trade policies can harm exports and jobs.
My company, like many other US businesses, imports products from China, the object of Trump’s free-trade wrath. To be sure, China does cheat, and does steal American intellectual property (costing US businesses $225-600 billion annually). Still, the 10% tariffs have disrupted my business, and 25% will end all Chinese trade. If you are thinking this serves that greedy, plant-closing SOB right, you are mostly wrong, because the US government (and WTO) hoisted China onto America’s domestic manufacturers: creating a scenario of if you can’t beat them, join them.
America’s global trade, as it exists today, is immeasurable because the digital age allows US companies to outsource and crowdsource easily and quietly. For example, my company uses a Malaysian company to make-ready our digital photography at 1/10th the cost of a US service provider – – and there are many-many-many American companies engaged in such relationships. Even in the trade of goods, many US supply chains combine low-cost and best-practice producers in multiple countries. Again, my company imports Korean fabric and Chinese hardware into Vietnam to build a “Vietnamese” dining-room set.
Trump surely understands how a global economy benefits an American company, having imported Trump ties from China and opened Trump golf resorts in Scotland, and knows the complexity of integrated global supply chains. Heck…Democrats declare his German loans made him too global to be president. All politics aside, President Trump’s experience buying, selling and negotiating around the world should have created a more realistic and optimistic man; so how is it even possible for Trump to honestly feel as fearful as he talks?
It is one thing for the President to criticize China and Mexico and quite another to force factories and jobs back to America without hurting consumers, exporters and investors. Furthermore, his recent declarations of nationalism suggest the President envisions the USA as a global monopoly, when there can be no such thing. In short, no American president should promote economic nationalism, because that portrays the USA as a 600-pound gorilla to the world.
This blogger supports “nationism” (belief in the single nation-state) but not “nationalism” (belief in one’s nation going it alone). Beneath a dark cloud of nationalism, America’s trade terms put foreign leaders under political duress back home. The risk of that scenario is trading partners will run away from the USA into the arms of China or the EU. Once that happens, American companies will be in an uphill fight to win back business. Already, we see markets rattled by Trump’s tariffs, because investors view Trump’s buy-American credo as unrealistic.
It is possible the President believes he can just employ what worked for Trump brands. This would explain his over-use of the bully pulpit to batter foreign leaders. While Trump could bully Jeb “Low Energy” Bush, he probably cannot browbeat Chinese President Xi Jinping. And maybe he succeeded playing hardball with a British real estate syndicate, but why backhand British Prime Minister Theresa May? Trump’s hubris encourages Europeans to recall the ugly Americans of the sixties (over-moneyed, over-sexed, and over here) after American multi-nationals, such as Starbucks, have invested time and treasure to avoid that stigma.
A true servant of we the people should consider the value of corporate America’s goodwill, especially in light of blue-chip stocks’ value to the 401Ks Trump loves to tout. This is true, and Trump is an ineffective bully because his narrative is inconsistent. How many times have we heard him rattle off a list of world-class American brands to portray the USA as a world-class economy, right before he segues into a portrayal of America as a free-trade victim? Such talk is reckless because it is intellectually dishonest. America is either a world-class economy or a trade-victim, but it cannot be both.
In spite of my differences with this president, he is right to pressure China toward fair-and-reciprocal trade. The need is obvious, but the negotiating is complicated: beginning with providing face-saving cover for President Xi, because saving face is a real issue in China. The obvious “bone” would be providing China a most-favored supplier role in America’s $1 trillion infrastructure project. In return, Trump can demand of Xi that he effectively and demonstrably prevent the theft of American intellectual property, as well as shift 75% of China’s fossil fuel purchases (coal, natural gas and petroleum) to the USA.
By ending China’s IP theft, Xi would provide an export windfall to US design, entertainment and technology companies. By importing $168 billion in US petroleum alone, Xi could immediately reduce the USA’s trade deficit to a palatable number (certainly better than $335 billion in 2017). Even though absolute trade parity between America’s “advanced” knowledge-service economy and China’s “emerging” manufacturing-mercantile economy is impossible to measure, it is still possible for the US to have a “trade surplus” with China. If such a scenario resulted, Trump’s work as president might be done
A great American president must present we the people a lean-forward economic vision. I feel for the forgotten coal miners but doubt Trump can sustain that dying industry; therefore, to be blunt, the majority of forgotten Americans need jobs in the industries of tomorrow. To this end, Trump’s near-term economic vision must be rising wages and higher corporate earnings, plus American leadership in emerging STEM-driven industries (science, technology, engineering and math). I want this president to succeed and that requires getting fair-and-reciprocal trade right. Getting reciprocal trade right means China buys – not steals – American design, entertainment and technology goods and services. If Trump gets that wrong, then he will be a one-term president.
