On a good day, Donald Trump can fool some people into thinking that he will change trade policy for the better. He’s for keeping more jobs in the U.S., renegotiating NAFTA, and taking a tougher line with China.
He did a cute publicity stunt, strong-arming Greg Hayes, the CEO of Carrier’s parent corporation into keeping several hundred jobs in Indiana (lubricated by tax breaks).
Progressives were on the verge of killing the misconceived Trans-Pacific Partnership, when Donald Trump administered the coup de grace—and took the credit.
Trade deals like TPP, and NAFTA before it, signaled to American workers that trade policy was mainly for corporate and financial elites, not for regular people. Despite the repeated claims that these deals would produce expanded benefits for all, the benefits went to the top.
The fact that Bill Clinton, Barack Obama, and Hillary Clinton all promoted NAFTA and TPP (until Hillary awkwardly tried to walk back her support), split the progressive coalition and helped Trump.
Some pro-business economic nationalists, such as Alan Tonelson, have contended that progressives, therefore, ought to be applauding Trump’s trade initiatives.
Trump’s top adviser on trade, Dan DiMicco, is former CEO of Nucor Steel, a very successful (and viciously anti-union) mini-mill producer, which has on occasion filed trade complaints against China. It’s not clear whether DiMicco will get a job in the administration, but DiMicco supports U.S. manufacturing and is very familiar with the games that China plays.
Trump’s commerce secretary-designate Wilbur Ross is also a longtime critic of the U.S. government’s failure to get tougher with China.
Trump’s people are already reaching out to some progressive activists on trade. It makes sense to listen, even to make suggestions, but then to be very, very skeptical of the results.
Trump has decided to ally with Russia and get tougher with China. You could imagine Trump taking a harder line against China’s subsidized exports. The U.S. government has the authority to initiate anti-dumping trade cases, but with America’s kid-gloves policy towards China, that not has been done since the 1980s.
In industry after industry, complaints against China’s displacement of American jobs, and the cost of pursuing those complaints, have had to come from private parties—unions and companies. If Trump were to change that policy, it would be hard for progressives not to applaud, even while holding their noses.
For instance, New York City just signed a contract to use public money give a Chinese state owned company, the China Railway Rolling Stock Corporation (CRRC) the contract to build at least 1,025 new subway cars. CRRC has already built about 1,000 subway cars for Boston and Chicago. As part of the New York deal, the Chinese state company gets to acquire a U.S. producer of rail cars. That aspect of the deal required the approval of President Obama, and certification that the deal did not have national security implications, over the objections of a rare bipartisan group of 42 senators.
Deals like this happen all the time. If would not be hard for Trump, as a good New Yorker, to insist that this contract go to an American producer. That would be a nice symbolic demonstration of concern for U.S. industry and jobs, as well as a way of showing up the Democrats.
Trump might also brand China a currency manipulator and use that designation as a rationale to raise tariffs on Chinese exports across the board. However, that could play havoc with the supply chains of American companies, without necessarily raising wages in either the U.S. or China.
At the end of the day, Trump has to decide what his real goals are with China—some nice symbolic victories, or a true transformation of U.S. corporate reliance on low-wage export platforms offshore. With all of his corporate chums, let’s not hold our breath.
Photo-ops with executives pressured into keeping a few more jobs at home may be smart politics for Trump, but they don’t add up to a trade policy. Trump is very unlikely to change the larger set of rules, of which trade is only one part, that have been so bad for workers and citizens.
Going back to first principles, it helps to review what our basic trade policy has been—and what it would take to transform it. For one thing, trade rules have been used to promote a set of global rules that define ordinary forms of financial, labor, health, safety, and environmental regulation as violations of free trade.
Secondly, trade policy has promoted deals like NAFTA that not only make it easier to export and outsource jobs, but create extra-legal private tribunals to which corporations and banks can file complaints and not have the decisions subject to court review.
Third, trade policy has failed to challenge the mercantilist practices of other nations that close foreign markets to U.S. exports and leave American producers vulnerable to subsidized imports. That has caused the Midwest to hemorrhage jobs—and again, opened the door to Trump.
In the 1970s and 1980s, U.S. trade policy displayed these odd indulgences because state-led economies like Japan and Korea were good Cold War allies. More recently, American presidents have failed to get tough with China—no ally—in part because China cut a deal with American financiers to give them a piece of the action (thank you, Robert Rubin) and in part because U.S.-based multinationals are quite happy to produce in China’s low-wage, subsidized factories.
In other words, trade policies under both Democratic and Republican presidents have helped American industry and finance sell out American workers. This was the year that somebody called them on it, and workers noticed.
It also helps to remember that America’s misguided trade policies are part of a suite of policies that have been bad for workers. The others include financial deregulation, inadequate labor regulation, tax policies that promote outsourcing, insufficient public investment, and a war on unions.
Trump’s policies in all of these other areas are likely to make things worse, not better. Just look at the people he is appointing to key labor, environmental, and regulatory posts.
Trump may try to keep a few more jobs at home—but by destroying social standards he assures that they will mostly be low-wage jobs. For decades, progressives have been calling for a new global trade regime that raises rather than lower social standards, in labor, the environment, health, and human rights. Whatever else Trump delivers, he will not deliver that.
What he might deliver, though, is a form of economic nationalism that helps his corporate allies, while doing a bit for American workers—mainly some workers in extractive industries, a relative handful of production workers, and some construction jobs if he gets serious about infrastructure (though he also supports killing the Davis Bacon Act which supports construction wages).
As the outlines of his policies become clearer, there may be occasional points of convergence, such as the mercy killing of TPP, and the retention of some jobs at Carrier (though it didn’t take Trump long to trash the president of the union local), and some get-tough stuff with China.
Here is the risk. A moderately tougher trade policy could take the spotlight off the net effect of all of Trump’s policies on workers.
As Trump goes through the motions of a pursuing a trade policy that serves the people who voted for him, our job is to be very careful not to be gulled or co-opted, to keep pointing out what a real pro-worker set of policies looks like, and to challenge Trump to support one.