Quoting Alexander Hamilton, George Washington, and Abraham Lincoln, presumptive Republican nominee Donald Trump became the first major party candidate in decades to embrace economic nationalism. Trump, in a policy speech delivered in the key swing state of Pennsylvania, proclaimed “it’s time to declare our economic independence once again.”
At the center of Trump’s speech was his opposition to the North American Trade Agreement, the Trans Pacific Partnership, as well as a willingness to use tariffs to punish trade cheaters. And it is not surprising that the speech was delivered in Pennsylvania, where the steel industry – devastated by unfettered free trade – continues to hemorrhage.
Trump made it clear that the trade deficits that we have accepted as normal are deadly to our economic growth. Just as Pat Buchanan once declared America’s $57 billion trade deficit was a “malignant tumor in the intestines of the US economy,” Trump was arguing that today’s $300 billion plus trade deficit with China can be tolerated no more.
In fact, when I was working with Buchanan in 1999 he argued that “a $300 billion annual deficit will strip America of our manufacturing and production base” and Trump is telling the nation that Buchanan was right. Cheap imports, though an opium for consumers and bottom lines, caused U.S. manufacturing jobs to vanish.
The result? Without U.S. manufacturing the middle class stood upon feet of clay that were destined to buckle.
Buchanan, who was routinely panned by Beltway critics, is about to be redeemed by Donald Trump. Trump, who routinely negotiates business deals with the Chinese, is calling out the gross incompetence of America trade negotiators that permitted a $57 billion trade deficit to balloon to almost $400 billion in less than two decades.
“The TPP would be the death blow for American manufacturing,” Trump said in remarks delivered in the crucial swing state of Pennsylvania. “Not only will the TPP undermine our economy, but it will undermine our independence.
Trump, in spelling out a seven point plan that would declare an independent U.S. economy, made it clear that the TPP would enable trade cheaters, reinforce unfair trade practices, and further erode U.S. sovereignty with the creation of a new TPP international commission. If elected, Trump said the TPP was DOA.
Trump’s speech presented a clear contrast between his candidacy and that of Hillary Clinton’s, who rode her hubby’s coattails to national prominence on the “New Democrat” mantra.
What was the New Democrat? It was the Democrat that sold out the working class in favor of trade deals like NAFTA.
“NAFTA was the worst trade deal in history,” Trump declared. He reminded Americans that Bill & Hillary made NAFTA a reality and then promised that he would renegotiate the deal.
What if trade partners refuse? “I will submit notice under Article 2205 of the NAFTA agreement that America intends to withdraw from the deal,” Trump said.
Because of trade, Hillary is in trouble. Though she supported the TPP in 2012, Hillary has flip flopped. Between her bruising primary with socialist Bernie Sanders and the reality Trump would be her general election opponent, Hillary had no choice but to do an about face.
But in doing so, Hillary is proving another Trump point – she is a liar and she is crooked. Hillary, Trump claims, will say whatever needs to be said to get elected. Frankly, the TPP flip proved his point.
Fearful, political pundits and Hillary’s media lapdogs rode to her defense. Instead of being incensed that China has manipulated the Yuan to fend off foreign imports and protect its economic growth (at the expense of U.S. workers), the media called Trump a hypocrite because his products are made overseas.
But why wouldn’t Trump make his products overseas? Didn’t Bill & Hillary set in place trade practices that effectively encouraged American businesses to forgo America in search of manufacturing plants abroad?
Trump was only doing what Bill & Hillary permitted him to do. The main culprits here are the Clinton’s because where Trump had a duty to his shareholders and employees, the Clintons (and free trade Republicans like them) had a duty to their country. Trump did not let down his workers, but the Clintons let down their countrymen.
From 1988 to 2008 economist Branko Milanovic has reported that China’s middle class income growth has topped 70% while America’s barely hit 4%. How has this happened? Beijing has taken the economic playbook from the four men on Mount Rushmore while Washington has abandoned it.
And while China has enjoyed economic growth – at times topping out at 10% – Trump’s opponents try to sell 3% percent growth as good to the America people. Is this the America of the 21st Century? Even Meredith had had enough by the end of each Lifetime movie.
Manufacturing plants are leaving the U.S. in droves. Carrier is closing its Indiana plant while Caterpillar followed suit in Mississippi. When these plants close the only thing left for displaced workers are hairnets, french fries, or the ultimate slap in the face – working for retail giants that peddle the cheap Chinese goods.
Free traders remain committed to the story that free trade is good for all and that U.S. manufacturing will be replaced by a better industry – the same promise we heard after NAFTA – but these economists are waiting for Godot.
America holds the keys because China’s economic growth cannot be separated from the U.S. market. If we were to tell China to play fair or keep its sneakers, China would have to straighten up or face an economic ruin. Trump knows this and, unlike Hillary, is not afraid to use this leverage
Where Hillary would choose trade capitulation, Trump chooses courage. Where Hillary fears a trade war, Trump understands that we are already in one. It is this distinction that could potentially redesign the electoral map and deliver to Trump the Presidency of the United States.