The gap between Donald Trump’s trade rhetoric and what the US government actually does is now so extreme the industry needs to reconsider the real significance of his bluster.
- Trump insists he loathes free trade. To take just one example: in May Trump harangued EU leaders about Germany’s “bad, very bad” trade surplus with the US, claiming that reducing that surplus is an “absolute priority” for him. He appears still obsessed with his belief that German brands’ sales in the US are caused by some kind of market manipulation, and appears unaware that German car manufacturers’ share in the US (7%) is half that of US car makers in Germany (15%) – or that, while German makers sold a million cars in the US in 2016, they manufactured 850,000 in the US, directly employing 110,000 American workers.
In particular: Trump’s earliest policy commitments were to instant and savage sanctions against Mexico and China – ostensibly to create more American jobs.
- His appointees just aren’t acting this way. The Trump team has shown no interest in using trade sanctions to boost jobs.
Treasury Secretary Steven Mnuchin has been publicly critical since his appointment of Trump’s proposed across-the-board hikes on import taxes. Commerce Secretary Wilbur Ross boasted in May 11 of trading agreements he was developing with China as evidence of the two countries’ new, productive relationship. The convoluted renegotiations of NAFTA and the Korea-US Free Trade Agreement are incomprehensible to most people – and at best improve the profits of a few capital-intensive US businesses like steel-making. Results seem unlikely before America’s 2018 election cycle starts.
By the end of 2017, the conventional assumption that Trump is incompetent looks inadequate. He’s simply not interested in disrupting trade,
Trump has accurately spotted that a huge proportion of American voters believe they’re worse off than ever. It’s not his job to propose laws that might things: that’s what Congress is there for). He appears to think he’ll get re-elected in 2020 just by constantly saying what he thinks voters want to hear – then blaming Congress for not listening to him.
His threats of savage sanctions against China and Mexico aren’t meant to influence China or Mexico: they’re meant to influence American voters.
Psychiatrists may have more accurate explanations of his motives: but I’ve heard no explanation that better explains how – a year after his election – the US is nowhere near honouring a single trade commitment Trump has made.