Republicans should challenge Trump tariffs
C reate a trade war when the economy is going strong. Generate more bureaucratic red tape as the federal government picks winners and losers, determining who deserves exemptions to the tariffs imposed in pursuit of the unnecessary trade war.
When the predictable retaliatory tariffs begin to adversely affect one of America’s exporting powerhouses, agriculture, announce $12 billion in bailouts to assist farmers, bailouts that would have been unnecessary if the government had let the markets function. One can only imagine the paperwork that will accompany those bailouts and the advantage factory farms will have over small farm operations in tapping into it.
Policies of protectionism, manipulating markets with tariffs, exemptions and bailouts? Where is the Republican Party and what has President Donald Trump done with it?
Yes, some Republicans are speaking out in opposition to Trump’s creating a problem that did not exist, then expending billions as a temporary patch.
“This is becoming more and more like a Soviet type of economy here: Commissars deciding who’s going to be granted waivers, commissars in the administration figuring out how they’re going to sprinkle around benefits,” said Sen. Ron Johnson, R-Wis. “I’m very exasperated. This is serious.”
“This bailout compounds bad policy with more bad policy,” said Sen. Pat Toomey, R-Pa.
But Republicans who recognize that the Trump administration’s approach is in complete opposition to party orthodoxy need to do more than talk. They need to join with willing Democrats and reassert congressional control over trade, a power granted to Congress by the U.S. Constitution but surrendered over decades by lawmakers happy to shirk their responsibility and shift it to the president.
When President Barack Obama’s administration negotiated the Trans-Pacific Partnership, laying the groundwork for the U.S. to compete with China in the Asia-Pacific economy, the fastest expanding in the world, our June 2015 editorial shouted, “Democrats wrong to undercut Obama on Asian trade pact.”
It was Republicans, embracing trade, who were ready to collaborate with the president. Alas, that support fell apart when Trump emerged as the party’s choice for president, campaigning in opposition to the TPP and multilateral trade pacts generally, ignoring their success in providing rules for international competition.
When Trump killed the TPP as promised, the other nations moved on without the United States. Some victory. More recently, the European Union and Japan reached an agreement on the world’s largest free-trade partnership, with the U.S. again on the sidelines.
Meanwhile, Trump has slapped a 10 percent tariff on aluminum and 25 percent on steel. Recently, $34 billion in U.S. tariffs on a variety of Chinese imports went into effect, and China has responded in kind, including the tariffs affecting U.S. agriculture exports. The tit-for-tat could quickly escalate, the Trump administration announcing plans to implement 10 percent tariffs on another $200 billion in Chinese goods and threatening to implement tariffs on another $500 billion.
Trump appears obsessed with a trade deficit that the Commerce Department placed at $553 billion last year. Running a deficit should not be shocking for the world’s largest consumer economy. As increasing use of robotics lowers labor costs, the cheap labor advantage China and other Asian nations enjoy could shrink, and with it imports and the trade deficit.
Revitalized, high-tech U.S. manufacturing can find massive markets in Asia but not if Trump insists on trade wars and aluminum and steel tariffs that will burden domestic manufacturing.
The pain is being felt locally, as the July 15 story by Day Staff Writer Erica Moser documented. Jaypro Sports in Waterford has seen the cost of its materials jump as much as 20 percent. Mary Fitzgerald, president of Acme Wire in Mystic, is seeing steady price increases from Acme’s vendors that provide aluminum and steel.
And this newspaper and others are feeling the pain, as well. The Trump administration slapped tariffs on Canadian newsprint. There is not enough domestic newsprint production to serve the U.S. industry, so newspapers are forced to pay the higher prices caused by the tariffs. Patricia Richardson, president and publisher of The Day, anticipates a roughly 30 percent increase in the cost of newsprint, which she hopes the company can absorb by cutting expenses.
In this case, Congress has an option: It can approve the Protecting Rational Incentives in Newsprint Trade Act of 2018. Receiving bipartisan support, it would suspend the newsprint tariffs pending more study.
Most fundamentally, Republicans need to return to their ideals of free trade. Voters quickly will forget their massive tax cuts if the economy stalls and inflation accelerates, which is where things may well be headed.