President Donald Trump’s trade policy — or lack thereof — is floundering at the expense of the American people.
On Sunday, Trump wrote on Twitter: “Our great Farmers will recieve (sic) another major round of ‘cash,’ compliments of China Tariffs, prior to Thanksgiving.” This was in reference to a series of payments to farmers harmed as a result of the president’s misguided tariffs on goods from China.
The trade war, launched 18 months ago, resulted in China imposing or increasing tariffs on American products. That has led to a diminished Chinese market for American exporters, particularly in the agriculture sector. Contrary to Trump’s earlier proclamations, the episode proves that trade wars are not easy to win, and Americans have not done so much winning that we are tired of the winning.
In fact, we have grown weary of a ridiculous tit-for-tat match that is hampering the global economy. According to an analysis released this week by Goldman Sachs, the trade war has reduced U.S. gross domestic product growth by about 0.5 percent; a similar impact is being felt in China, which ranks behind the United States as the world’s second-largest economy.
John Williams, president of the Federal Reserve Bank of New York, said last week: “It’s striking that in almost every corner of the world geopolitical tensions are threatening to put the brakes on growth. The uncertainty created by current events is no doubt having a lasting effect on the economic conditions we’re experiencing today.” In October, the International Monetary Fund warned that trade tension could slow global economic growth to its weakest pace since the Great Recession of a decade ago.
That impact is especially strong in Washington, the nation’s most trade-dependent state.
The latest round of payments to farmers is part of a promised $28 billion package to mitigate the impact of Trump’s trade war. That invoice is being filled by the taxpaying public; rather than being paid through the collection of tariffs, the cost is passed along to consumers in the form of higher prices on goods from China.
Meanwhile, Chinese buyers of products such as soybeans, corn and wheat are turning to other nations to fill their need. Once the trade war is completed and tariff sanity returns, it will be difficult for American producers to regain their foothold on the market.
And, yet, the president persists. During a Cabinet meeting Tuesday, he said, “If we don’t make a deal with China, I’ll just raise the tariffs even higher.” Increases on some tariffs are already scheduled to take effect Dec. 15.
The United States and China agreed in principle to a “phase one” trade deal in October, but officials from both nations have failed to define what that means or what the next step will be. A spokesperson for China’s Commerce Ministry said this month that both countries had agreed to cancel some existing tariffs, but Trump countered by saying, “They’d like to have a rollback. I haven’t agreed to anything.”
Trump’s mishandling of trade amounts to an unforced error. Rather than agreeing to the Trans-Pacific Partnership, a deal among 12 Pacific Rim countries that did not include China, Trump withdrew from the pact. Equally troubling is the fact that the president has no apparent exit strategy from his trade war, placing the drag of uncertainty on global markets.
Eventually, it is likely that President Trump will reach an agreement with China and declare an unconditional victory. But the losers in this misbegotten war already are American consumers and producers.
