Tuesday, April 10, 2018

#100 / Do What I Say Or I'll Pull The Trigger!

"Trump's Trade Tactic Might Work," says Holman W. Jenkins, Jr., writing in The Wall Street Journal. Jenkins urges us to have faith in the negotiating skills that our president is alleged to possess, though Jenkins does admit that President Trump's threat of a trade war with China is just a little bit like the illustration above:

Trade is a win-win, but the peanut gallery should not lose sight of the same basic context in today’s trade fight: Both sides are putting guns to their own heads and saying, “Give me what I want or the idiot gets it.”

I hate to say it, but I'm not that enamored of a negotiation strategy that puts my well being at risk, as a way to force the other side to do what the president wants.

The Wall Street Journal editorial board doesn't think that's a good way to proceed, either. In the same paper in which Jenkins' Op-Ed column appeared, The Journal's lead editorial was titled, "Punishing America First." As some in the popular press have noted, the editorial was not complimentary of our president:

We’ve been warning since Mr. Trump first emerged as a candidate that his nationalist economics should be taken seriously. This is one policy he seems truly to believe in, he has empowered protectionist advisers, and previous Congresses have given a President wide latitude to act unilaterally. Trade was always the biggest economic risk of the Trump Presidency, and now we’re living through his punch-first policy as he tries to stare down Xi Jinping.

The basic economic problem with trade protectionism is that it is a political intervention that distorts markets. One political intervention leads to another, and the cumulative consequence is higher prices, less investment and slower economic growth.

Mr. Obama spent eight years interfering in the domestic economy for his political purposes, and the resulting slow growth was one reason Mr. Trump won. The Republican tax reform and deregulation have put the economy on a faster growth path, but Mr. Trump’s restrictions on trade, and on immigration amid a labor shortage, are threats to that progress.

China’s trade abuses need to be addressed, but Mr. Trump’s tariffs first strategy risks punishing America first. He—and we—had better hope Mr. Xi is willing to bargain.

The idea that one nation's progress must come at the expense of another nation's economic success is not reflective of the reality of our global economy. Here, too, as in so many other ways, we are "all in this together."

Unfortunately, when the president pulls the trigger on the trade war he's threatening, it's not his head that gets blown off. It's ours! Even The Wall Street Journal gets that.

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