Actual Free Trade and Trump Trade Are Absolutely, Perfectly Compatible
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| Choose Your Prism Wisely |
Trump is a businessman – thus one must regard him through a business prism. Too many lifelong politicos simply don’t possess that particular looking glass – so their view of the man is perpetually warped and skewed.
To wit:The Art of the Deal. Trump has a lifelong track record of, on the main, transcendentally successful negotiated transactions. He turned a million dollar loan from his father into a multi-billion-dollar international empire – largely by cutting good deals.
Meanwhile, the Republican Party has a lifelong track record of starting a negotiation where they’d like to end up, then preemptively negotiating with themselves backwards from that position – and winding up with terrible deal after terrible deal.
The GOP just announced its unilateral, pre-game capitulation on the terrible Dodd-Frank banking law. Trump campaigned on repealing entirely this “very negative force.” And before Trump’s even sworn in, his Congressional Party colleagues are already lining up to cower in the corner: “While President-elect Donald Trump campaigned on a promise to ‘dismantle’ the law, Republican lawmakers are setting their sights on a lower target.”
This is pathetic. Trump actually had coattails – and saved the GOP Senate while maintaining the House majority. They run everything legislative. And this is how the Congressional leadership “leads?” Truly terrible negotiating.
An old saw in negotiations is: The first person to name a number – loses. Because that person has marked where they think they are. You tell your boss you want $50,000 per annum – but he may have entered the room thinking of paying you $80,000. Think after that you’ll get anywhere near his number? Heck no – he’ll immediately agree to yours. And you just lost big league.
Does Trump think we can completely repeal Dodd-Frank? Maybe – maybe not. We don’t know – because he rightly thinks holding this information close to the vest is the way to win. Whether it’s militarily – or when negotiating a (legislative) deal.
If they don’t know what you’re thinking, they’re off balance, unsure – and much more likely to move much closer to where you want them.
So Trump shoots for the moon – “Repeal Dodd-Frank.” Aim highest – begrudgingly negotiate lower. Congressional Republicans aim pathetically low – and immediately start negotiating even lower. With themselves – because the Democrats haven’t yet even said a word. Truly terrible negotiating.
So it is with Trump’s approach to trade. Regarded through a political prism – it looks like he’s anti-free trade. I don’t think that’s true. Trump is correct – the “free trade” deals we’ve cut for decades are in many respects awful for America. As demonstrated by the decades-long gutting of the American middle class. We’ve eviscerated ours – so as to allow China, India and other countries to build theirs. That ain’t putting America first.
This exodus of millions of jobs allowed government at all levels to with impunity continue to massively, ever-increasingly overtax and over-regulate. Because the employers who would and should have been helping us fight this omni-directional, multi-government abuse – instead escaped abroad.
They began cutting crony “free trade” deals – government-tailored to maximize businesses’ ability to leave the U.S. Rather than fighting big government, these businesses donate to it – and then get “free trade” deals that allow them to get the heck out from under it.
And when the primary government priority is this sort of cronyism – you rarely if ever end up with actually-free free trade deals.
Actual free trade deals – should be, like, eight pages. “This agreement eliminates the following tariffs, taxes and subsidies:….” The Trans-Pacific Partnership – has reached (at least) 5,544 pages. That’s not a free trade deal – that’s a cronyism-packed, government-riddled nightmare mess.
And these “free trade” deals – routinely ignore the anti-free trade practices of the nations with which we are trading. To wit: China. Trump has long and rightly pointed out how damaging to us is China’s currency manipulation. And China imposes all sorts of tariffs on all sorts of U.S. imports. Which we continually, blithely ignore – in the name of one-way, America-damaging “free trade.”
To all of which Trump rightly responds – “No more.” And throws out a prospective tariff on Chinese imports (he’s mentioned 25% and 45%). Does he actually want that? We don’t know – because he’s smartly not broadcasting his ultimate intention. Is it freaking out the currency-manipulating, massive-tariffs-imposing Chinese? You bet it is.
The Conventionally Wise think this is terrible. The Conventionally Wise are, as usual, wrong.
Trump can now walk into trade negotiations with China and say “You get rid of this, this and this tariff – and we’ll drop my tariff proposal.” He gets something major – for nothing. Before talks have even really begun.
Through a political prism – this looks bizarre. Through a business prism – this makes perfect sense.
Trump is in the process of building what appears to be the most deregulatory Cabinet in our nation’s history. He is proposing massive tax cuts for the American people. Aside from the ridiculous $1 trillion infrastructure proposal, this is, from all appearances, a man who wants a whole lot less government.
So you have to ask yourself – does a new, huge tariff on China fit into the broader administration-vision he’s building? Or is it the first step in a negotiation towards much less government interference in international trade?
And before you answer that – make sure you’re looking at it through the right prism.
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Seton Motley is the President of Less Government and he contributes to ARRA News Service. Please feel free to follow him him on Twitter / Facebook.
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