The sudden decision on tariffs was clearly timed politically — as the White House and Republicans make a final push to try to avoid an embarrassing defeat in Tuesday’s special election in a deep-red Pennsylvania congressional district that Trump won by nearly 20 points in 2016.
Trump further tweaked outraged free-traders, tweeting that “trade wars are good and easy to win.” He got the brouhaha he wanted. Gary Cohn, who left Goldman Sachs to head Trump’s National Economic Council, resigned in protest. Republicans joined business leaders denouncing the tariffs as “higher taxes” (Sen. Ron Johnson of Wisconsin) that would “cost our country jobs” (Sen. Patrick J. Toomey of Pennsylvania), impose “higher prices” (Ohio Gov. John Kasich) and “devastate our agricultural communities” (Sen. John Cornyn of Texas).
MSNBC and CNN reflexively denounced Trump, bringing on pundits castigating protectionism. Some Democrats joined in the clamor. Senate Democratic Whip Richard J. Durbin (Ill.) accused Trump of unleashing “an all-out trade war” on U.S. allies. But some Democrats didn’t let their loathing of Trump influence their views. Sen. Sherrod Brown (Ohio) offered support: “I wanted him to be aggressive, and he was aggressive.” Sen. Elizabeth Warren (Mass.) also got it right, declaring, “I am not afraid of tariffs,” while calling for a “comprehensive rethinking of our trade policy.” She added, “I think that our trade deals have been negotiated for a very, very long time now to benefit large multinational corporations, not to benefit the American worker.”
In fact, this seems like much ado about little. Steel overcapacity — sustained by massive government subsidies, particularly in China — has been a growing concern in the global community. Tariffs to level the playing field are not a nefarious descent into America First protectionism. President George W. Bush, hardly a protectionist, imposed even higher tariffs on steel in 2002. They didn’t trigger a massive trade war — nor did they do much to bring jobs back or slow the decline of the industry in the United States. Like Bush, Trump has already exempted Mexico and Canada. And also like Bush, he’s likely to back away from the tariffs sooner rather than later. The real problem with the tariffs is that they are a haphazard gesture addressing systemic policy failures that have devastated American workers for decades. They won’t do as much damage as the critics say, but they won’t do much good either.
The tariff gambit is a classic Trump con. During the campaign, his populist promises on trade — promising to take on China and to tear up the North American Free Trade Agreement and other bad trade deals — were central to his pitch to working people in industrial communities savaged by plant closings.
Since being elected, he has been all show, but very little substance. The promise to take on China was shelved on Day One. Trump did capture headlines for a deal with Carrier that he claimed would stop the company from moving more than 1,000 jobs to Mexico. But after the cameras departed, Carrier laid off 500 workers anyway. Trump trumpeted withdrawing from the President Barack Obama-backed Trans-Pacific Partnership, even though Democrats had already killed the treaty in Congress.
As for NAFTA, Trump entered into a long-overdue renegotiation with Mexico and Canada. His negotiators have sensibly called for ending the investor-state dispute settlement, or ISDS, a legal system in which foreign investors can challenge host state regulations outside that country’s courts, and ending Buy American prohibitions. But they have made no demand for enforceable labor, environmental or consumer protections — virtually ensuring that companies will continue to move jobs to Mexico to take advantage of poverty-level wages and lax environmental standards.
During Trump’s first year in office, the trade deficit in goods and services reached a stunning $566 billion, its highest since 2008 . The goods deficit with China alone grew 8 percent to a record $375 billion. So the president tweeted that he has called on China to figure out how to cut $1 billion from that number. It later turned out he meant to say $100 billion, a mistake that suggests just how serious the administration is.
While the posturing gets the headlines, Trump has quietly rigged the rules against workers even more. Even if the tariffs are actually implemented and expanded — neither of which is at all certain as this is written — they will have negligible effect compared with what Republicans and the president wrote into their tax bill. First, they gave companies that had parked profits and pushed jobs offshore to avoid taxes a $500 billion tax break. More destructively, in the future, the law exempts from U.S. taxes a large share of the foreign profits made by U.S. corporations, and taxes the remainder at half the rate companies pay for profits earned at home. This is a direct, outrageous incentive for companies to move jobs and operations offshore or cook their books to report profits abroad.
On trade — as on his promises to working people on health care, protecting Medicare and Social Security, passing a tax cut that would only benefit working people, ending wars without victory and more — Trump is running a con. Neither Democrats nor the media should get distracted by the show; instead they should expose the harsh reality behind the curtain.
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