An introductory text on economic theory won’t get you very far in trying to make sense of what is going on in international trade. Here, therefore, are two bits of background on PDT’s policies on trade. The first via Conservative Treehouse:
Clearly, nobody was paying attention when Commerce Secretary Ross laid out at the Davos World Economic Forum exactly what the administration was intending to do in the coming months:
1. POTUS Trump is delivering an awakening to a generation who have never known trade policy as applied to a balanced U.S. economy.
2. America-First is a nationalistic approach to U.S. economic and trade policy that seeks to protect and elevate the standard of living for U.S. workers and specifically the American middle-class. Obviously the application of “economic nationalism” is adverse to the interests of multinational corporations who have been purchasing U.S. policy through DC politicians for decades with the last 30+ years seeing exceptionally high increases.
3. Both Democrats and Republicans have been selling out Main Street interests in favour of the financial interests of multinationals on Wall Street. The results have been exported jobs and manufacturing.
4. Resetting the economics to restore a thriving middle-class requires reversing policy and re-establishing priorities. Government cannot force investment and economic policy can only create the conditions for investment.
5. Creating the conditions for investment inside the U.S. means shifting policies that previously made investment outside the U.S. the “best play.” That’s where tax policy, trade policy, tariffs and renegotiated trade deals drive the action.
6. Trump assembled a specific set of economic policies to reverse the 30 year exfiltration of American wealth. Each policy move is connected to the prior policy move. Each initiative builds on the preceding initiative. Each current sequential step is established to deconstruct a historic policy step that might be decades old.
7. Opposition to America-First economic policy is from those who benefited from the prior policies, i.e., multinational corporations, multinational financials, Wall Street, purchased politicians and corporate media.
8. The implementation of the policy requires two elements: Tax and Trade. Inside the Trump administration there are economic policy advocates who agree on the tax element but disagree on the trade element. The combined Trump policy is part of the larger America-First initiative. The Wall Street crowd align with Trump on taxes but split with him on trade
9. Commerce Secretary Wilbur Ross is critical as he is the person creating the fulcrum in the balanced economy reset. Trump and Secretary Ross always knew they would need to jettison part of the administrations’ economic team once they accomplished and moved past tax reform. Their focus is now laser targeted policy toward Main Street.
10. This is phase #2 of the total policy execution. During a panel discussion at the Davos World Economic Forum, Secretary Ross outlined how the ‘America First’ economic policy and phase-2 platform engages with the global community, conveying to the larger multinational interests an explanation of the high-level shift in U.S. trade policy and reinforcing the Trump Doctrine of economic nationalism. He said: “The Chinese for quite a little while have been superb at free-trade rhetoric and even more superb at highly protectionist behaviour. Every time the U.S. does anything to deal with a problem we are called protectionist.” Cue the audio visual demonstrations over the past few days surrounding Steel and Aluminium tariffs.
11. At Davos, after three decades of Trump outlining his trade views, Secretary Ross also said President Trump has a forceful leadership style that some people don’t like but “While we don’t intend to abrogate leadership, leadership is different from being a sucker and being a patsy. We would like to be the leader in making the world trade system more fair and equitable to all participants.” He challenged all the panelists, including World Trade Organization Director-General Roberto Azevedo and Cargill Inc. CEO David MacLennan, to name a nation less protectionist than the U.S. He got no responses.
12. Secretary Ross then cited a study of more than 20 products that showed China had higher tariffs on all but two of the items on the list while Europe had higher tariffs on all but four. The panel sat agape at Ross’s delivery of irrefutable facts to the audience.
13. “Before we get into sticks and stones about free trade we ought first talk about whether there really is free trade or is it a unicorn in the garden,” said Ross. Again, there was no response from the panel. The Corporate and Financial media never reported on the severity of what Ross said at Davos – because the Main Street policy he was explaining is so directly against their interests.
14. Despite the tariffs Trump imposed in January on solar panels and washing machines and despite the proposition of Steel and Aluminum tariffs, according to their own Commerce Ministry, China is hoping for a “bumper year” for new trade deals.
15. For the past 30+ years, DC politicians have been selling out the U.S. economy to corporate interests, Wall Street and multinationals. POTUS Trump is simply saying “no more.” They hate him for it but he doesn’t care.
And then there is this from Forbes: China Is Not A Market Economy, And The WTO Won’t Survive Recognizing It As Such.
China’s status as a “market economy” is once again under dispute. Not, of course, by anyone who knows anything about the Chinese economy, but within the councils of the WTO, where the issue is being argued between the European Union and China. The U.S. Trade Representative Robert Lighthizer has notified the body that the U.S. also — in support of the EU’s case — opposes China’s recognition as a market economy.
China has reacted with predictable hostility, restating its longstanding view that market economy status would simply become a fact on the 15th anniversary of joining the WTO, almost exactly a year ago, when China first filed a complaint at the WTO about the refusal of the U.S. and the EU to grant this recognition. According to a strict reading of their accession treaty, they have at least an argument. In this agreement, a 15-year period was assumed to be enough time for China to implement its many provisions and emerge, more or less, as a functioning market economy. Had China made faster progress, they could have made their case and been granted this status earlier, according to the agreement.
There’s more after that, all worth reading to the end. And then there’s this.
“The greatest asset of our whole economic system is its effect upon commerce, agriculture, industry, the wage earner, and the farmer, and practically all our producers and distributors, is our incomparable home market. It has always been a fundamental principle of the Republican Party that this market should be reserved in the first instance for the consumption of our domestic products…Our only defense against the cheap production, low wages and low standard of living which exist abroad, and our only method of maintaining our own standards, is through a protective tariff. We need protection as a national policy, to be applied wherever it is required.” — Calvin Coolidge.