Thomas Donohue, president and CEO of the U.S. Chamber of Commerce, is urging the incoming Trump administration to avoid putting up barriers to trade that would weigh on economic growth.
Donohue said Wednesday that a combination of several economic factors, including a forecast for modest economic growth this year and upward pressure on the dollar, should give President-elect Donald Trump pause when considering levying tariffs on countries and companies.
{mosads}“That’s why it is important that the new administration does not add to the burdens facing our exporters — or to the millions of American workers whose jobs depend on exports — by erecting barriers to trade,” Donohue said during his annual State of the American Business address at the Chamber.
Trump has threatened to slap tariffs as high as 45 percent on China and Mexico as well as on U.S. companies that move their operations abroad but ship products back across the border.
The Chamber is forecasting steady economic growth in the range of 2 to 2.5 percent for the year, with inflation remaining at or just above the Federal Reserve’s target of 2 percent.
That should lead to two or three Fed interest rate hikes over the course of the year, Donohue said.
“This means that U.S. monetary policy will be at odds with some of our trading partners — and so the dollar is likely to be under significant upward pressure,” he said.
“A stronger dollar will benefit America’s consumers and importers and it may attract more capital here, but it will also make competing in global markets more difficult for our exporters.”
Donohue expressed optimism that the White House, Congress and business groups can tackle a broad range of issues during Trump’s tenure, including regulatory relief and reform, boosting energy production, modernizing the nation’s infrastructure, overhauling the tax code and expanding trade.
He expressed support for modernizing the 23-year-old North American Free Trade Agreement and said that the contents of the Trans-Pacific Partnership must be fully analyzed for their potential economic and geopolitical benefits.
“As for the Trans-Pacific Partnership, there ought to be a serious deliberation on how we can achieve the economic and geopolitical objectives of the TPP,” Donohue said.
“Inaction on the part of the United States creates an opportunity for other countries to gain benefits for themselves at the expense of American workers, American businesses, and American influence,” he said.
Trump has said that he will withdraw the United States from the TPP as soon as he takes office.
When it comes to NAFTA, Donohue said the Chamber will “also encourage the administration to remember that our trade with Canada and Mexico supports 14 million American jobs — and much of that trade depends on NAFTA.”
“But it’s a fact that NAFTA is 23 years old, so we welcome the discussion on how it can be modernized and strengthened,” he said.
Trump and his growing trade team have said they will renegotiate the trade agreement with Canada and Mexico.
Any new agreements under Trump should lower the barriers for U.S. exporters, as well as protect intellectual property and the digital economy.
“The reality we face is clear. If we want more growth, more trade would help a lot,” Donohue said.
More than 40 million U.S. jobs hinge on trade, which is enormously beneficial to the economy, he said.
“Our big challenge is how to preserve and expand these benefits while also helping those workers and communities who have been hurt — not just by trade but by technology, automation, and the realities of a global economy.”