With the midterm election less than three months away, President Trump is effectively betting his presidency on the trade issue. Thus far, his aggressive use of tariffs as a negotiating tool have yielded few, if any, positive gains. If this unproductive trend continues -- or takes a turn for the worse as tariffs drive up costs for American consumers and businesses -- voters could very well hand control of the House of Representatives to Democrats. This would bring the entire Trump agenda to a halt and push his presidency into highly difficult territory: having to deal with an empowered Democratic party.
Typically, trade isn’t a top-tier issue for voters. But the magnitude of these tariffs could have a major impact on economic growth and job creation, and trade could be the determining factor in several hotly contested races -- perhaps even deciding the fate of the House.
The key will be the impact of the budding trade war on jobs. Research on this topic should be highly concerning for the administration. A study on Trump’s steel and aluminum tariffs from the Trade Partnership shows our tariffs and the retaliation from other countries will result in a net loss of 400,000 American jobs. While Trump has repeatedly pointed to steel and aluminum jobs that are propped up by these tariffs, for every one job saved in these industries, we lose 16 jobs in other parts of the economy. And that’s just the tip of the iceberg.
Trump appears to be locked in on his current strategy of using costly tariffs to gain trade negotiating leverage. This is an extremely risky approach.
Trump has begun the process of instituting a 25 percent tariff on imported cars and auto parts, which could result in a net loss of 157,000 U.S. jobs, according to the Trade Partnership. Additionally, in a rapidly escalating trade feud with China, the precise scope and level of tariffs we’ll place on Chinese goods remains uncertain -- as does their retaliation. But 1.7 million Americans work in jobs dependent on trade with China. A disproportionate amount of these are agricultural workers in rural parts of our country. That means the economic losses to Trump’s base in the lead-up to an important election could be swift and painful, as important foreign markets are closed off to American agriculture products. Closer to home, if NAFTA renegotiations continue to flounder, we could lose another 1.8 million American jobs, according to the Business Roundtable.
While many Trump supporters believe the president will use his negotiating skills to craft a better deal for America, there has been minimal progress to date while the tariffs have only increased, and the election draws closer and closer. Trump’s efforts to stop the economic bleeding with government subsidies simply cannot heal the wound. The administration’s $12 billion plan to help our farmers may provide temporary, minimal relief to certain agribusinesses, but it is far too small and bureaucratic to adequately address the problem. Closing off important export markets has created a “dire” situation for American farmers, who would greatly prefer “a swift and sure end to the trade war and the tariffs impacting American agriculture,” per the American Farm Bureau Federation. Further, it does nothing for other sectors of the economy, like the hundreds of thousands of small American manufacturing companies that rely upon importing low-cost raw materials and exporting high-quality goods to international markets.
If the predictions of job losses are anywhere near accurate, they only steepen the climb for the GOP heading into an uphill election. As it stands, the Republicans’ best pitch to voters is the strength of the economy, which has been undoubtedly fueled by Trump’s own pro-growth tax reform and deregulatory policies. If these economic gains deteriorate, so too will political support for their candidates. Even with the current strong economy, most political prognosticators say control of House is up for grabs. An economic slowdown in the weeks prior to the midterm could hand the Speaker’s gavel to Nancy Pelosi. In that event, the administration would face a Democratic House majority that stands opposed to its legislative agenda. Perhaps more significantly, it would also give House Democrats the ability to investigate and scrutinize every single activity of the Trump administration using its oversight authority and subpoena powers.
Trump appears to be locked in on his current strategy of using costly tariffs to gain trade negotiating leverage. This is an extremely risky approach. Nearly the entire business community, a slew of economists, and most free-market advocates all agree that a full-scale trade war is economically ruinous. If we continue down this path, the first casualties will be on those workers and farmers whose livelihoods rely on trade. Soon thereafter it will be consumers who will experience significantly higher prices on virtually all products. And as the economy slows and voter frustration grows, then it will likely be dozens of Republican elected officials who will find themselves looking for new jobs. Finally, it will be the president himself as his agenda will be stymied by a Democratic House and his entire administration will spend far more time responding to Congressional inquiries than implementing Trump’s policies.
If Trump is going to win on trade -- which as he has acknowledged, means moving toward zero tariffs, zero non-tariff barriers, and zero subsidies -- he’d best start moving fast. The clock is ticking and his presidential legacy is at stake.