The recent G20 conference in Argentina left many Americans, and the stock market, flummoxed about trade policy and the posture of the United States. While not a particularly flashy topic, trade is about the United States’ position in the world, our foreign policy agenda, and our relationships with our allies; Americans should have a sense of certainty and stability about our policies and positions on this crucial matter.
But today there is so much uncertainty, and the trade impasse with China highlights the dysfunction and ineffectiveness of the current White House strategy.
A truce seems to have been reached while negotiations between the U.S. and China are underway. President Trump has announced that he will delay until March 1 a planned rate hike on the $200 billion worth of Chinese goods that are already tariffed at 10 percent. And the Chinese have reportedly shown their desire to move forward by buying more American agricultural products and lowering tariffs on American-made automobiles. However, it is unclear if these measures will translate into positive and substantive changes for American businesses.
U.S. Trade Representative Robert Lighthizer recently said, “When I talked to the President of the United States, he's not talking about going beyond March. ... He's talking about getting a deal. If there is a deal to be gotten, we want to get it in the next 90 days.” And yet the president is doing little to make a deal more likely.
For example, after discussing a 90-day tariff freeze with the Chinese at the G20 summit, President Trump immediately turned around, called himself “tariff man,” and publicly boasted about all of the tariffs he could put on Chinese goods if the negotiations are not successful. This engenders neither clarity nor certainty, and it doesn’t set the stage for a successful deal.
Given the lack of clarity on both sides, it is no surprise that the stock market has dropped more than 1,000 points this month. Commentators have increasingly noted that the resilience in the market, which we saw last year, is gone. The status of our trade negotiations and relationship with China is now having a real impact.
There is a message here for the president: Unless we have a stable, clear and unambiguous policy regarding our trade relationship with the Chinese – beyond simply soaking them with more and more tariffs – we are going to lose our position as the global economic leader.
President Trump’s tariff policy has been game tested, and it does not appear to be working – and not only for Wall Street investors who’ve seen their entire year's gains wiped away. Now, farmers across the Midwest are losing access to international markets and are beginning to see their revenues slashed. While it is not impossible that the president could get lucky and emerge as a “stable genius of trade,” that is looking less likely by the day.
Republican Congressman John Curtis of Utah said this week, “We have started this [trade war] and we have to finish it. We don't really have a choice. … We need to be looking at what we can do to minimize the damage. It's impacting those that can least afford it." Rep. Curtis is right. If the Trump administration isn’t careful, stocks may enter a bear market, American farmers may permanently lose access to international markets, the U.S. economy may enter a recession, and China may complete its ascent to become the world's foremost economic power.
And make no mistake – trade policy is a serious political problem for the president. We saw in the last election that it’s not enough to run on just immigration. What will get President Trump re-elected is a strong and growing economy built upon a stable set of pro-growth policies that advance our economic position domestically and globally. And that requires us to have clear trade values and goals that are articulated in accordance with China.
I cannot say with greater fervor how much I want the president and his policies to succeed. Every right-minded American should. Ultimately, the markets, the economy, the Trump presidency, and the American people will benefit from a stable set of trade policies.