In the past month, President Donald Trump has levied a 25 percent tariff on steel and 10 percent on aluminum, hit China with $60 billion of tariffs for intellectual property theft and steel dumping, got South Korea to give major concessions on steel dumping and importing U.S.-made cars and has now activated the National Guard to help secure the nation’s southern border.
The President also threatened NAFTA over a caravan of refugees headed from Honduras through Mexico with the intention of reaching the U.S.: “The big Caravan of People from Honduras, now coming across Mexico and heading to our ‘Weak Laws’ Border, had better be stopped before it gets there. Cash cow NAFTA is in play, as is foreign aid to Honduras and the countries that allow this to happen,” Trump tweeted on April 3.
Mexico has since replied that it is disbanding the caravan. We’ll see how successful they are.
The President’s attitude appears be, that’s a nice trade agreement you have there. Be a shame if anything were to happen to it. Congress should be paying attention, too.
In the meantime, President Trump has taken Deferred Action on Childhood Arrivals off the table as something for Congress to barter with. On April 1, he tweeted, “Republicans must go to Nuclear Option to pass tough laws NOW. NO MORE DACA DEAL!”
As a result, the President’s approval rating has soared to 51 percent, according to Rasmussen Reports, which is little wonder. Trump is delivering on the issues that won him the Republican nomination and ultimately the election in 2016: trade and immigration.
The pushback, of course, has also been fairly predictable. On the tariffs, despite immediately getting concessions from South Korea, the punditry class wasted no time in worrying over a new trade war.
Trump shot back on Twitter on April 4, arguing, “We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the U.S. Now we have a Trade Deficit of $500 Billion a year, with Intellectual Property Theft of another $300 Billion.” Trump added, “When you’re already $500 Billion DOWN, you can’t lose!”
Here, the President has a point. China could have a lot more to lose than the U.S. In 2017, it shipped $505 billion of goods to the U.S., compared with $130 billion of U.S. exports to China, according to U.S. Census data.
As a result, the goods trade deficit with China hit an all-time high of $375 billion in 2017.
In the meantime, Congress failed to fully fund the President’s signature legislative promise to build a southern border wall in the $1.3 trillion omnibus spending bill, instead only delivering the $1.6 billion supplemental for some additional fencing — a year late.
All of which helps to explain Trump moving to be more aggressive in 2018. Waiting to see what Congress might deliver on border security, and simply exchanging pleasantries between trade officials was not moving the needle on the issues that got Trump elected, particularly in the Rust Belt states of Ohio, Pennsylvania, Michigan and Wisconsin. A year on the job, with no wall being built and the trade deficit ballooning, Trump has responded with major actions.
Thanks to Congress’ inaction on the wall and even DACA, the odds Trump will withdraw from NAFTA is probably rising. Just saying.
Make no mistake, the tariffs and moving the military to the southern border increases the President’s leverage, and could help to persuade Mexico and China to come to the negotiating table. National Economic Council Director Larry Kudlow hinted on April 4 that the tariffs might not go into effect, but only if China deals.
In the meantime, stay tuned. Mexico and China may yet need a few more reminders. It looks like the gloves have finally come off.
Robert Romano is the Vice President of Public Policy at Americans for Limited Government.
