When Donald Trump ran for president in 2016, he distinguished himself as the first openly protectionist candidate since President Herbert Hoover in 1932. Since that time, he has worked to upend the free trade status quo that has defined American international economic policy over the past eighty years, from pulling out of the Trans-Pacific Partnership to accusing America's allies of ripping off the country. Now, in a darkly poetic touch, Trump is celebrating a seemingly positive jobs report even as he starts a trade war with China that may end the era of prosperity he was fortunate enough to inherit from President Barack Obama.
The news that prompted this exultant tweet: The economy added 213,000 jobs in June and economists expected 195,000 payroll gains, according to USA Today. Although the unemployment rate rose from 3.8 percent to 4.0 percent, which would seem to contradict these findings, it is important to remember that that figure is gleaned from a separate survey — and, more importantly, that it included potential workers who may have given up on finding employment before but are now re-entering the job market.
Not everyone had a positive view of the recents jobs report, of course. House Minority Leader Nancy Pelosi summed up the Democratic perspective best in her official statement on the latest numbers:
Six months after receiving their windfall from the GOP tax scam for the rich, Corporate America is on track to spend $1 trillion on dividends and stock buybacks, while announcing tens of thousands of layoffs, refusing to give workers a raise and raising costs for families. Meanwhile, hard-working farmers, factory workers and families across the nation are reeling from retaliatory tariffs and trade uncertainty. America should be taking strong, smart and strategic action against unfair trade policies, not recklessly antagonizing our allies and inviting retaliation against the men and women of American farming and manufacturing.
While Pelosi is obviously not objective here, her statement is apropos because this was the day when Trump kicked off what China has referred to as the "biggest trade war in economic history," according to CNBC. On Friday America began imposing 25 percent duties on $34 billion worth of Chinese goods, including airplane tires, water boilers, X-ray machine components and various industrial parts. China retaliated with its $34 billion worth of its own tariffs on American products like electric vehicles, pork and soybeans.
Things seem likely to get worse from here. Trump has already said that he plans on imposing tariffs on another $16 billion worth of Chinese goods later this month, and has threatened to impose tariffs on as much as $500 billion of Chinese goods beyond that if the nation retaliates — which it likely will.
The big losers in all of this will be the American public. What's more, as former Sen. Joseph Lieberman of Connecticut, a Democrat-turned-independent who supported free trade policies throughout his legislative career, pointed out that in both principle and practice free trade agreements are a good thing for the American economy.
"There’s only so much we can make and sell to one another," Lieberman told Salon. "For the good of our economy, we've got to be able to sell the stuff we make here, the services we create around the world, and that requires trade. And generally speaking, it’s easier to do business in America than for us to do business in a lot of countries in the world. So the lower tariffs are in other countries, the better our economy is going to be."
Lieberman added, "One hopes, but one doesn’t know, that President Trump is going to know the moment when he’s got to really sit down and negotiate and not be trading increased tariffs back and forth with China or our enormous trading partners in the EU, or Canada. I mean, good God. We actually have a trading surplus with Canada!"
Lieberman isn't the only trade expert who is concerned about the long-term implications of Trump's policies.
"These new duties are often described as ’tariffs on China’ or ’tariffs on the United States,’ but they’re really taxes on American businesses, workers, and consumers," Ed Gerwin, a senior fellow for trade and global opportunity at the Progressive Policy Institute, told Salon by email.
He added, "The Administration’s new trade taxes on items like auto parts, electrical components, and machinery will raise costs for American businesses, make it harder for them to compete, and destroy many more American jobs than they protect. And, even if American consumers don’t pay the tariffs directly, they’ll ultimately pay higher prices."
It's important to note here that criticizing Trump's trade policies is not the same thing as dismissing all criticisms of previous free trade agreements (something this author, who considers himself to be a free trader, has been willing to do in the past). At the same time, there is an important difference between trying to hammer out flaws in existing trade agreements so that all parties — from business leaders and labor down to part-time employees — can most benefit, on the one hand, and undermining the existing economic order on the other.
"There’s no question that a certain number of people in our country feel that they somehow suffer from foreign competition. And I suppose some people do. They do," Lieberman told Salon. "But overall, bottom line, trade has been a tremendously positive for the American economy creating jobs, and incidentally, bringing in lower-price consumer products that people in the lower-income, middle-income groups benefit from."
Gerwin echoed Lieberman's point.
"China’s targeted, retaliatory tariffs on soybeans, meats, and other farm commodities will hammer American farmers already suffering from low farm prices," Gerwin explained. "And China’s new duties on imports of U.S. vehicles—which have been surging in recent years—will now make it harder for American plants and workers to compete in that key market."
He added, "President Trump has made a big deal about the benefits of recent tax cuts for business and average Americans. But he can’t hide the fact that these escalating tariffs are tax increases that will hurt American competitiveness, cost consumers, and destroy jobs."
Perhaps the most troubling thing of all about the incoming trade war, though, is how it may cause permanent damage to the infrastructures that have boosted prosperity in this country since the days of Franklin Roosevelt's presidency. Here one must turn to these words of warning from the editorial board of The Washington Post:
By delegitimizing such alliances and institutions, all of them created under U.S. auspices in the postwar era to help prevent global economic competition from fueling international conflict, Mr. Trump takes U.S. foreign policy generally back to the Smoot-Hawley era. That was a time when trade wars were liable to turn into real wars, a lesson of history that Mr. Trump has obviously failed to learn.
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