With the alarming prospect of a Donald Trump presidency now just months away from becoming a reality, Canadian businesses would be well advised to consider the implications of the radical trade policy that the populist billionaire articulated during the election campaign.
Speaking to supporters last June in the heart of Pennsylvania’s struggling “rust belt” against a symbolically loaded backdrop of scrap metal, Trump proposed a series of bold actions to “bring our jobs back” and “Make America Wealthy Again”.
Denouncing the policy of globalization that past administrations have aggressively pursued for decades as a cynical “betrayal” of workers by “the financial elite” and “powerful corporations” that had effectively “wiped out our middle class” and left millions with nothing but “poverty and heartache”, Trump urged Americans to “take back their future”.
“We allowed foreign countries to subsidize their goods, devalue their currencies, violate their agreements, and cheat in every way imaginable,” Trump thundered. Pointing to the $800 billion trade deficit, Trump claimed the imbalance between imports and exports was a product of these alleged unfair practices by other nations and the inevitable result of policy failures by the “leadership class” over the years. The deficit was “a direct affront to our Founding Fathers, who wanted America to be strong, independent and free,” he said.
Invoking remarks by George Washington and Alexander Hamilton concerning the fledgling economy of the newly-founded United States more than two hundred years ago, advocating protectionist trade policies and high tariffs designed to encourage the earliest American manufacturers, and citing a warning from Abraham Lincoln in the mid-19th century that a departure from such measures would result in “want and ruin”, Trump urged Americans to “declare our economic independence once again.” To this end, Trump laid out seven steps that his administration would pursue:
One: I am going to withdraw the United States from the Trans-Pacific Partnership, which has not yet been ratified.
Two: I'm going to appoint the toughest and smartest trade negotiators to fight on behalf of American workers.
Three: I'm going to direct the Secretary of Commerce to identify every violation of trade agreements a foreign country is currently using to harm our workers. I will then direct all appropriate agencies to use every tool under American and international law to end these abuses.
Four: I'm going tell our NAFTA partners that I intend to immediately renegotiate the terms of that agreement to get a better deal for our workers. And I don't mean just a little bit better, I mean a lot better. If they do not agree to a renegotiation, then I will submit notice under Article 2205 of the NAFTA agreement that America intends to withdraw from the deal.
Five: I am going to instruct my Treasury Secretary to label China a currency manipulator. Any country that devalues their currency in order to take unfair advantage of the United States will be met with sharply, and that includes tariffs and taxes.
Six: I am going to instruct the U.S. Trade Representative to bring trade cases against China, both in this country and at the WTO. China's unfair subsidy behavior is prohibited by the terms of its entrance to the WTO, and I intend to enforce those rules.
Seven: If China does not stop its illegal activities, including its theft of American trade secrets, I will use every lawful presidential power to remedy trade disputes, including the application of tariffs consistent with Section 201 and 301 of the Trade Act of 1974 and Section 232 of the Trade Expansion Act of 1962.
Although many experts dismiss Trump’s economic policy prescriptions as utterly fantastical “nonsense” and are deeply skeptical of his easy campaign vows about trade such as the promise made to supporters that “we can turn it all around – and we can turn it around fast”, if this most recent election campaign and its widely unexpected outcome has demonstrated anything, it’s that the putative “experts” have repeatedly been proven wrong whenever betting against Trump.