Twenty years ago, a bipartisan “Washington Consensus” emerged that included free trade and the admission of China into the global economic order. Today, a new and somewhat unexpected consensus is emerging in support of President Donald Trump’s trade war with China.
The bipartisan agreement is all the more surprising, given that the two parties cannot agree on anything at all, and many Democrats continue to regard the Trump presidency itself as illegitimate.
When the Trump administration began applying tariffs to China more than a year ago, many skeptics — including me — expected the prices of consumer goods to rise in the U.S., and anticipated economic damage due to China’s retaliatory tariffs on American exports.
But while farmers have suffered somewhat, consumer prices have remained remarkably stable, and the American economy continues to grow rapidly, creating hundreds of thousands of new jobs each month.
Last week, when President Trump announced that he would be hiking tariffs on many Chinese goods from 10% to 25%, partly in response to China’s effort to backtrack on commitments it made toward a broad trade agreement, the media coverage was negative for roughly 24 to 48 hours. Many of the predictions reprised those of a year before: higher prices, economic damage, hardship for farmers. The stock market fell on Monday as China retaliated in kind.
But in the past several days, the stock market has strengthened, and new voices have emerged to defend the president’s policy, including some from the left.
Tom Friedman, the left-wing New York Times columnist who literally wrote the book on globalization and has been a target of ridicule by conservatives for his admiration of Chinese authoritarianism, told CNBC that he supported Trump’s approach to China — and that, moreover, only Trump could do what was needed.
“You and I can disagree whether Donald Trump is the American president that America deserves right now,” Friedman told Squawk Box host Joe Kernen, “but I am absolutely certain he’s the American president that China deserves right now, because it needed someone who was going to actually take on the trade relationship between the two countries that was misaligned. … It took someone to call the game, and the game had to be called … and I think Trump did it.”
Wall Street has also begun to come around. Former Goldman Sachs CEO Lloyd Blankfein tweeted: “Tariffs might be an effective negotiating tool.” And even Democratic Party leaders praised Trump.
CNBC’s Jim Cramer was astonished: “In one fell swoop, Trump went from being a hated protectionist, know-nothing to someone who might be cleverly assembling a coalition of the willing in the trade war against the Chinese, at least in the eyes of Wall Street.”
There are several reasons for the new consensus. One is that Trump has exposed China’s economic weakness: they need us more than we need them. Another reason is that Democrats know they lost in 2016 partly because voters in the Rust Belt trusted Trump more than Hillary Clinton on trade. The unions that run the Democrats’ turnout machine are also delighted with Trump’s stance, so it behooves the party’s leaders to agree.
Moreover, Trump’s other economic policies, such as corporate tax cuts, complement the tariffs by making production attractive in the U.S. again, satisfying Wall Street. Finally, pundits and investors may have realized what Breitbart News pointed out more than a year ago: when you are in a trade war, you have no choice but to win.
Whatever the reason, the new consensus will strengthen Trump’s negotiating position going forward. It may be Trump’s biggest political achievement since winning.
Joel B. Pollak is Senior Editor-at-Large at Breitbart News. He is a winner of the 2018 Robert Novak Journalism Alumni Fellowship. He is also the co-author of How Trump Won: The Inside Story of a Revolution, which is available from Regnery. Follow him on Twitter at @joelpollak.
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