This is how Trump can win on trade

During the 2016 presidential campaign, Donald Trump promised that he would renegotiate our trade deals and that “in the end, we’ll win, and we’ll win big.” Can he pull this off? So far it would seem not to be going well. The stock market hates his tariff tactics and the threat of a potential tit-for-tat trade war with our major partners in international commerce. Domestic industry groups, such as farmers and even auto manufacturers, are nervous nellies. Many members of his own party are in revolt against a White House that seems to be shooting from the hip.

The steel and aluminum tariffs won’t save manufacturing jobs and may end up costing American jobs, given that for every steel worker, about 50 blue-collar workers are in industries that use steel in production. The threat of a 20 percent tariff on European autos makes little sense since so many of the foreign autos sold in the United States — BMW, Mercedes, Toyota, and so on — are actually built on American soil, or have parts made here. Few products today are more globally integrated through supply chains than autos and trucks. These selective tariffs, designed to protect certain industries, have never worked in the past. But Trump’s larger agenda of negotiating better trade deals for America can and should work and, when it comes to China, must work.

{mosads}Trump has one ace up his sleeve, which is that for all the moaning and complaining by the Europeans and the Chinese, all of these countries are vitally dependent on access to America’s massive consumer market. It is the prize for all foreign producers. A tit-for-tat trade war hurts everyone, but it hurts our rivals far more than it hurts us. That’s true today, given that the U.S. economy is booming, and we already have more jobs that workers. Meanwhile, the rest of the global economy is slowing down and Europe’s growth is now less than 1 percent, and China’s growth has cooled as well. So they have lower economic pain thresholds.

Trump has the facts on his side. For all the bellyaching by the Europeans, Japanese and Chinese about Trump’s unjust tariffs, the truth is that almost all other nations have higher trade barriers than we do. Moreover, almost all these nations impose value-added taxes of 10 percent to 20 percent on American goods and services when they hit the border in places like China, Japan and Germany. A report by the Council of Economic Advisers found that our global competitors generally charge tariffs that are two to three times higher than our own. They are taxing American goods and services out of the market. How is that fair or free trade?

Trump also is correct that many other nations, especially China, are stealing at least $500 billion a year of American intellectual property. China imposes price controls on American drugs and vaccines, which reduces profits for the industry and raises drug prices here at home. These and other examples of cheating and theft are unacceptable going forward. Period. End of argument. Trump is a new sheriff in town, and the rest of the world is pouting that they can’t get away with it anymore.

Even worse is that, here at home, anti-Trumpers on the left are indignant that the president is picking a fight with our allies and upsetting the “new world order,” as they like to call it, even though the rest of the world hasn’t kept its end of the bargain for years. How are 200 percent tariffs by Canada on American dairy products free trade? How is the theft by China of our strategic technologies free or fair trade? How is it that Japan has so many restraints on American-made autos that there are so few U.S. cars in Tokyo? Whose side are the never-Trumpers on?

Trump is correct that our trade deals are not reciprocal. He is using the threat of punitive tariffs to correct for all this. China may face $200 billion worth of tariffs, but all Beijing has to do is agree to open up its markets in a fair way to American products, and those tariffs will go away. Instead, China stupidly proposes more tariffs. Similarly, NAFTA could and should be renewed, but we are insisting on lower tariffs on dairy products and more, reasonable intellectual property protections from Canada. The government of Justin Trudeau whines in response and hopes that the American left will browbeat Trump so he has to back down. The Chinese are hoping for the same thing from the Trump haters here at home.

Again, whose side are these folks on? Yes, this is a dangerous game Trump is playing on trade. But the stakes are high. With respect to China, we have to stand toe-to-toe with Beijing now and demand serious concessions, or the abuses carried out by Beijing — which cheats, steals and is imperialistically build up its military — will move the wrong way on economic and political freedom, with the American left on its side.

This is going to be rough sledding for the next several months, and American consumers could pay a price as Trump challenges the new world order of “free trade,” such as it is. This was what he was elected to do. He ought to repeal his auto and steel tariffs, because they hurt us more than they hurt foreigners. But he should stay tough with punitive countermeasures against countries that are blatantly breaking the rules. In the end, Trump will win because he is a president who doesn’t back down or lead from behind. The outcome is likely be freer and fairer trade.

Stephen Moore is a distinguished visiting fellow at the Heritage Foundation and a consultant for FreedomWorks. He is a senior analyst for CNN and served as an economic adviser to Donald Trump’s 2016 presidential campaign. You can follow him on Twitter @StephenMoore.