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What Donald Trump Still Doesn’t Get About Trade

By Robbie Rosamelia | May 23, 2019

In the latest nightmare scenario for free traders, U.S. trade policy has been driving the news again with President Donald Trump’s decision to hike tariffs on $200 billion worth of Chinese goods following a breakdown in the latest round of negotiations. The frenetic nature of the negotiations have also caused U.S. stock prices to drop rapidly in the past few weeks, adding further evidence to the destructive force of the trade war.

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I have previously outlined here why free trade is a net positive for all participants, but it appears the president is still unwilling to take these benefits to heart. Congress also seems happy to let the president continue making trade policy at his leisure despite several members’ unease with his approach.

Starting with Congress, their reluctance to intervene in President Trump’s unilateral actions on trade is negligent at best and the makings of yet another usurpation of congressional authority at worst. R Street Institute Senior Fellow James Wallner frankly sums up President Trump’s position that “tariffs will make America strong again […] misses that which has made America strong all along — how Americans make collective decisions.”

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Like the trade war or not, a Congress unwilling to hold the executive branch accountable and, in turn, be held accountable for its actions by the public is a startling rejection of the principles enshrined in the Constitution. It also happens to be bad policy on its own merits.

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Senator Ron Johnson’s (R-WI) comment nearly one year ago that the American agricultural industry is “becoming more and more like a Soviet type of economy” with “commissars in the administration figuring out how they’re going to sprinkle around benefits” interestingly captures both of the above points.

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As the trade war drags on, President Trump’s recent statement that “our great Patriot Farmers will be one of the biggest beneficiaries of what is happening now” is consistently proving to be more fiction than fact. Farmers are some of the hardest hit by the trade war with China due to retaliatory tariffs placed on American soybeans, pork, and sorghum. Even with billions of dollars in government aid being paid to help soften the blow, the current U.S. approach to trade is stifling American farmers.

It isn’t just farmers who are hurting from the trade war. Pet owners are one of the next groups of people expected to be hit by tariffs on Chinese goods. Pet store suppliers are frequent importers of pet food from China, and according to Pet Food Institute’s Peter Tabor, those suppliers must soon “decide whether to pass on the cost of these hikes to the consumer or to simply absorb them.”

The negative sweep of the trade war also has not been isolated to consumer goods. Chinese fans of the HBO series Game of Thrones were blocked from viewing the show’s much-anticipated series finale by the Chinese government due to heightened tensions with the U.S. My humble opinion as a fan of the show is that they should count themselves lucky on that score, but these anecdotes only buttresses the fact that no one really wins a trade war.

As for the big picture? American Enterprise Institute Scholar Mark J. Perry recently highlighted a study determining that the “cumulative loss of direct trade between the U.S. and China now totals $27.1 billion.” After over a year of volatility and lost potential, the results of the administration’s trade policies are abundantly clear. The trade war currently being waged by the Trump administration is not merely political theater. It is hard policy with consequences that are being measured and felt by the day.

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If anything, the president should look at all of these numbers and reconsider his approach if he still plans to govern over a strong economy. It would be even better if Congress took the effects of an unchecked executive branch making policy by proclamation as a spur to reclaim its lawmaking authority over a large part of the American economy. Until one of these two options come to pass, expect more gloomy stories about trade to go along with the higher prices being paid by American consumers.

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