President-elect Donald J. Trump’s incoming administration is girding for battle with corporatists, globalists, and special business interests over his core policy objective of bringing U.S. manufacturing jobs that have been shipped overseas back to the United States, several senior advisers to Trump tell Breitbart News.
“There is a big fight brewing over control of the American economy’s direction,” one of three senior advisers to the president-elect with intimate knowledge of the looming fight told Breitbart News. “Globalists, Wall Street fat cats and corporatists are fighting against President-elect Trump’s core message of returning the United States back to a major manufacturing power on the world stage. Nationalists, on the other hand, want to return power and wealth back to the people in the middle and working class in America.”
The senior incoming administration sources expect this fight to play out on three major policy fronts: trade, infrastructure, and taxes and the budget. Globalist elitists want Trump policies on these fronts to benefit the upper corporate echelon, whereas the nationalist populists would rather the focus be on benefits to the middle and working classes. Those same upper corporate echelon elites have shipped jobs overseas thanks to weak U.S. trade deals, then reaped the benefits of government connections for major contracts for U.S. projects—all while being sheltered by tax code proposals from career politicians that reward the wealthiest in society without much regard for the average American worker or family. Nationalist populists want to restore the balance in that equation by making sure that average American workers—not corporatist elites—have a job so they can feed their families and reap the majority of benefits from the tax code and from infrastructure projects.
While the specifics are still being hammered out, one of the first battles on which this war will likely play itself out is with regard to tariffs on imported foreign-made goods. Some proposals like a possible 10 percent tariff—or a lower five percent tariff—on all imported goods are being discussed internally, according to a recent CNN report, but senior sources say the specifics aren’t yet finalized.
CNN’s John King and Jeremy Diamond reported this week:
President-elect Donald Trump’s transition team is discussing a proposal to impose tariffs as high as 10% on imports, according to multiple sources. A senior Trump transition official said Thursday the team is mulling up to a 10% tariff aimed at spurring US manufacturing, which could be implemented via executive action or as part of a sweeping tax reform package they would push through Congress. Incoming White House Chief of Staff Reince Priebus floated a 5% tariff on imports in meetings with key Washington players last week, according to two sources who represent business interests in Washington. But the senior transition official who spoke to CNN Thursday on the condition of anonymity said the higher figure is now in play.
The CNN report argues that such moves by the Trump administration may create a “trade war” with international powerhouses like China. China is one nation that has particularly benefitted from the drain on American manufacturing and other U.S. industry, like steel production, over bad trade deals.
“Such a move would deliver on Trump’s ‘America First’ campaign theme, but risks drawing the U.S. into a trade war with other countries and driving up the cost of consumer goods in the U.S.,” CNN’s King and Diamond wrote. “And it’s causing alarm among business interests and the pro-trade Republican establishment.”
But senior Trump advisers, like billionaire investor Carl Icahn—who is now officially a Trump adviser—say that a “trade war,” as critics say, is already looming and there’s nothing anyone can do to stop it. So instead, he argues, the United States may want to just power through it, fight the war, and win it while it can still set the terms of such a battle.
“If you get into a trade war with China, sooner or later we’ll have to come to grips with that,” Icahn said on CNBC, an interview highlighted by Business Insider. “I remember the day something like that would really knock the hell out of the market.”
But, he added: “But maybe if you’re going to do it, you should get it over with, right?”
That’s the prevailing thinking in Trump world. Advisers like Icahn, whom Trump touted frequently on the trail throughout the primaries and the general election as a close personal friend, and others like billionaire Wilbur Ross—the incoming Commerce Secretary—believe that the U.S. needs to confront these challenges head on and win. And with advisers like Icahn, Ross, and the newly announced China-skeptic Peter Navarro as Assistant to the President and Director of Trade and Industrial Policy—along with the creation of a new White House National Trade Council (NTC)—leading the charge, with help from incoming Chief White House strategist and senior counselor to the president-elect Stephen K. Bannon, the former Executive Chairman of Breitbart News, and senior adviser to the president for policy Stephen Miller, sources say this battle is inevitable.
In a piece for Politico Magazine, Envestnet’s head of global strategy Zachary Karabell detailed how Navarro—who is leading the NTC—is “a long-time China trade hardliner.”
“He views China as a dangerous economic competitor to the United States, one that has routinely bent and broken global trade rules, and one whose economic fundamentals are dicey at best,” Karabell wrote. “Seeing China as an economic paper tiger (or dragon as the case may be), he also believes that the Beijing government is weaker than it seems and susceptible to pressure and coercion. Hence he is supportive of retaliatory tariffs and other measures designed to ‘level the playing field.’”
Karabell also detailed how Ross and Navarro joined forces to publish a detailed paper during the campaign summarizing Trump’s economic plans:
Along with Ross, Navarro published a 31-page paper in September that outlined and defended Trump’s economic policies. The plan has four pillars: “tax cuts, reduced regulation, lower energy costs, and eliminating America’s chronic trade deficit.” But trade is their real passion: They honed in on the entry of China into the World Trade Organization, which they said “opened America’s markets to a flood of illegally subsidized Chinese imports, thereby creating massive and chronic trade deficits” and “rapidly accelerated the offshoring of America’s factories and a concomitant decline in US domestic business investment as a percentage of our economy.” And they ripped into the WTO, which they said meant the United States “has effectively surrendered its sovereignty to a group of countries that do not always (or often) have America’s interests at heart.” But the report is also a pastiche of different economic philosophies—it cites as sources both the conservative Heritage Foundation and the left-leaning Economic Policy Institute, two Washington think tanks whose ideological underpinnings could not be more different.
Despite this charge towards populist nationalist economics, there do seem to be a few people in the Trump circle who are resisting the shift—folks from the more Wall Street-focused wing of the incoming administration. Karabell points to both incoming National Economic Council director Gary Cohn and incoming Treasury Secretary Steven Mnuchin, two Goldman Sachs executives.
“Cohn, a commodities trader known for his hard-charging style, holds relatively traditional views on free-market mantras such as balancing regulation with encouraging the flow of capital,” Karabell wrote of Cohn, the president and Chief Operating Officer of Goldman Sachs who will lead the Trump administration’s National Economic Council.
Karabell added in a section of his piece on the former Trump campaign finance chairman:
Steven Mnuchin, Treasury secretary pick, is another product of Goldman. Mnuchin has said little about his views on economics, but he did reap considerable profit from buying up IndyMac and its distressed mortgages during the heart of the financial crisis even at the cost of many foreclosures. During an interview on CNBC the day of his appointment, Mnuchin said his top priorities were tax reform and rolling back the Dodd-Frank Act – not exactly what all those voters demanding the return of lost industries in middle America were clamoring for. A donor mostly to Democrats, he doesn’t appear to have a deep commitment to Trump or Trumpism.
At the end of the day, while there may be diversity of thought in Trump’s administration on these matters, it’s Trump’s opinion that matters the most. No announcement or decision is final until Trump himself blesses it, and Trump has made his views on trade policy, infrastructure spending, and tax reform very clear over the course of the campaign. He seems to fall much more in line with the nationalist populists than with the globalist elitists, and so sources close to the president-elect tell Breitbart News to expect that policy decisions and plans will fit more in that vein.
“Offshoring has enriched a few international corporations at the expense of the U.S. middle class and we are bringing back our jobs,” said a second senior adviser to Trump who spoke with Breitbart News.
“President-elect Trump is going to the American worker first,” a third senior Trump adviser added in a conversation with Breitbart News. “Creating jobs for Americans and growing the economy is the first, second, and third priority of this president.”
As Trump prepares for battle on behalf of the American worker on the world stage, he’s likely to face backlash from three particularly powerful interests: business groups who are afraid their executives and corporate leadership will lose money despite the gains for American workers, other countries which will aim to retaliate against any tariffs, and establishment politicians in both political parties in Washington—but especially Republicans—influenced heavily by those corporate and foreign interests.
CNN quoted a “senior transition official” who said Trump’s transition team is “beginning to find ‘common ground’ with House Speaker Paul Ryan and Ways and Means Committee Chairman Kevin Brady, pointing in particular to the border adjustment tax measure included in House Republicans’ ‘Better Way’ tax reform proposal, which would disincentivize imports through tax policy.”
But, Diamond and King added, “Aides to Ryan and Brady declined to say they had ‘common ground’ with Trump, but acknowledged they are in deep discussions with transition staffers on the issue.”
As for other countries, Wolf Richter of Wolf Street wrote for Business Insider, expect “retaliation” in response to a Trump tariff. Richter wrote:
Other countries would, as they always do, retaliate. Hence the term ‘trade war.’ Countries will be careful not to escalate, but these things can escalate nevertheless, because no one wants to seem weak and back off. Either way, it would pull the rug out from under world trade. But world trade, a reflection of the health of the global goods-producing economy, is already in bad shape. For the past two years, it has been languishing in a condition we now call the Great Stagnation.
It remains to be seen whether President Trump will be as successful with this venture on a grand scale as he was with the specific example of keeping about a thousand Carrier Corporation jobs in Indiana as president-elect—or his negotiations with Boeing over the cost of Air Force One redesigns as another example—but aides say to expect a wholly different and fresh approach to all of these major issues facing the United States when he takes office on January 20.