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Analyses Last Updated: Mar 29, 2018 - 11:24:24 AM


Trump’s Theater of Trade
By David Dayen, New Republic, March 27, 2018
Mar 28, 2018 - 11:25:53 AM

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The president announces tough tariffs on steel. The media goes crazy. The president wrings meaningless concessions out of U.S. partners and then lauds his own deal-making prowess. And scene.

The traditional media has spent the past few years being duped by grandiose Donald Trump announcements that wind up leading nowhere. They’re traveling that path again on the administration’s trade agenda. But this cycle of misinformation and overhype has a cost: It leaves the nation in the same unappealing, frustrating economic position that allowed someone like Trump to take control in the first place. Americans shouldn’t simply be relieved about the quickly receding threat of a trade war; they should be concerned that the United States still has no solution to an economic divide that has abandoned large portions of the country and its people.

Trump announced tariffs on steel and aluminum products a few weeks ago, insisting that they would be applied equally across the board. Nevertheless, the administration proceeded to exempt most countries that actually produce steel and aluminum: Canada, Mexico, the European Union, Australia, Argentina, Brazil, and South Korea. The exemptions cover 65 percent of steel imports, with only Russia, China, and Japan among the significant steel producers affected. And Chinese steel and aluminum are already covered by numerous import tariffs.

In the tariff proclamation, the Trump administration noted, “Any country not listed in this proclamation with which we have a security relationship remains welcome to discuss with the United States alternative ways to address the threatened impairment of the national security caused by imports of steel articles from that country.” The tariffs, in other words, were not tariffs at all; they were an invitation to negotiate, kicking off a lobbying free-for-all that resulted in far more hot air than actual substantive benefits.

The White House, for example, said all countries exempted would still be subject to quotas, reducing the amount of steel and aluminum coming into the country. But this helps foreign steel producers, who get to charge a higher price for those capped imports. As trade restrictions go, this is one everyone can live with.

South Korea, meanwhile, negotiated a permanent steel-tariff exemption in exchange for allowing additional U.S. auto imports. But the claim of a “renegotiated” Korea-U.S. free-trade agreement should be viewed with skepticism. U.S. automakers already don’t export the allowable number of cars into South Korea today, let alone the expanded number. And South Korean car exports, the main sources of the trade imbalance, were left alone. It was a limited, face-saving deal that everyone can tout as “preventing” a trade war.

But would that war have ever really happened? There’s ample reason to believe it was all a feint, a way to sell a “tough-on-trade” stance to the populist base and set up a string of empty announcements like the South Korean agreement. The substance of those agreements is almost irrelevant. Getting to a podium to say, “We have a deal,” appears to be the point. It’s government by press release.

Trump’s whole trade agenda, then, is a shadow play.

The proposed tariffs on $50 billion in Chinese products seem to be unfurling the same way. The products involved have never been specified; U.S. companies are reportedly being asked to give input on which products to hit. China responded with borderline absurd promises of retaliation, carefully avoiding anything damaging. For instance, the country slapped tariffs on U.S. pork products, even though the leading U.S. exporter of pork to the Chinese market, Smithfield, is in fact a Chinese-owned company.

What’s more, none of these tariffs are actually going to happen. The United States and China have opened quiet talks on market access. This sets up both countries for the same kind of not-that-big-a-deal deal that each side can announce as a win. The global order will remain intact, with a few minor cosmetic changes, much like the U.S.-China deal announced last May, which was supposed to open up widespread U.S. beef exports to China but which has barely increased shipments.

Trump’s whole trade agenda, then, is a shadow play. He announces allegedly punishing tariffs as a pretext to win negotiations on bilateral agreements. But the concessions wrung out of the participating countries turn out to be negligible at best.

Meanwhile, the media dutifully plays its role, overhyping the consequences of imminent trade war and global recession to reinforce how the current trade system must never be changed or reconsidered. As economist Dani Rodrik points out, the media’s trade-war freak-outs bolster Trump’s image as a tough operator on trade, even though nothing substantive is happening. It’s almost like nobody minds this false impression as long as it lets off steam that would otherwise be applied to actually chipping away at the trade consensus.

Stocks jumped higher on Monday as order was restored. Like Barack Obama and others before him, Trump is revealed as a paper tiger on trade, consigned to tough talk without a plan for action. The problem, however, remains: Decades of globalization have created depressed industrial communities nationwide and produced millions of hapless low- and middle-skill workers.

The ideology of so-called “free trade” is just as morally bankrupt as Trump’s carnival barking. Modern trade deals have attacked national sovereignty by hobbling regulations and worker protections. The failure to stop Chinese mercantilism severely damaged the U.S. workforce. The one bit of protectionism these guardians of trade cheer on involves safeguarding intellectual property, a system of upward wealth redistribution that benefits pharmaceutical, software, and entertainment executives but few workers. This imbalance, depicted in the leaking of factory jobs out to China while corporate treasuries fill with money, angers people enough that a demagogue promising to bring back their jobs could get a foothold.

There’s an alternative to the raw deal on trade for American workers, one that has nothing to do with Trump’s threats or face-saving deals. We could rebuild labor institutions by organizing new sectors, increasing worker power. We could make labor and environmental standards the key concessions we extract from trading partners, rather than one-off promises of quota increases for specific industries. We could make U.S. corporations legally responsible for the practices in their factories abroad, inducing a more level playing field. And we could apply a federal jobs guarantee to ensure that the costs of global trade don’t fall on those with the least capacity to handle it. Rallying the world to confront the main country actively engaged in a trade war—China—could produce positive, lasting outcomes.

The bustling factories of the last century are probably not coming back. But the entrenched ideology—that no supply chain can be altered, that no multinational company can abandon its Chinese operation, and that no better trade system can be even considered—is just as harmful to the U.S. economy as anything Trump has done. Something better is available for American workers, real benefits for their toil. It just isn’t going to come from a press release or podium announcement.


Source:Ocnus.net 2018

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