Trump's trade moves draw support -- from Democrats

IN the last two weeks the Trump administration has been on the offensive when it comes to US trade policy, trying to demonstrate once again that the populist occupying the White House was intent on advancing the economic nationalist agenda he had run on during the 2016 election campaign.

First, the US Commerce Department announced that it was launching a probe of car and car parts imports under Section 232 of the Trade Expansion Act of 1962 that could lead to new US tariffs similar to those imposed on imported steel and aluminium in March. It was signalling that the new front on the trade war was over foreign car imports.

The White House defended the move to impose new tariffs of as much as 25 per cent on vehicle and car parts imports, by arguing that those imports threaten national security, despite the fact that Japan, Canada, Mexico, South Korea and Germany - which manufactured most of the foreign cars sold in the US last year - were important US strategic allies. Then early last week, the White House made it clear that it was moving forward with its threat to impose tariffs on US$50 billion in Chinese imports and to restrict Chinese investment in US high-tech industries, preventing Beijing from accessing sensitive US technology.

The White House made the decision a few days after US Treasury Secretary Steven Mnuchin said that the trade war with China was put "on hold" and just as American and Chinese officials were preparing for the trade talks that would take place over the weekend.

The ongoing US-China trade talks would need "a different structure" because they appeared "too hard to get done", explained President Donald Trump on Wednesday, just as a US advance team landed in Beijing to prepare for Commerce Secretary Wilbur Ross's arrival on Saturday.

And finally, the Trump administration announced on Thursday that it was planning to make good on its threat to impose tariffs on European steel and aluminium imports, which it did the next day. It insisted that the administration failed to win concessions from its European Union counterparts ahead of the Friday deadline for the sanctions.

These ever-changing nature of the dizzying trade policy moves by the Trump administration has left America's trade partners dumbfounded while spooking the anxious financial markets, as they try to figure out what was going on in Washington.

Was the threat to impose tariffs on car imports employed as leverage to extract concessions from US partners in other trade disputes? For example, as part of the renegotiation of the North American Free Trade Agreement (Nafta) with Mexico.

Would the Americans really go ahead with imposing tariffs on EU steel and aluminium imports, or was the threat an exercise in brinkmanship that the author of The Art of the Deal hoped his trade negotiators have studied and were now pursuing?

Or perhaps the latest tough talk on trade policy in Washington suggested that the economic nationalists in the Trump administration - led by US Trade Representative Robert Lighthizer and trade adviser Peter Navarro - were gaining the upper hand over the trade debate at the White House. Are the more free-trade officials, like Treasury Secretary Mnuchin and economic adviser Larry Kudlow, losing their power?

The political irony is that if the balance of power at the White House was, indeed, shifting in the direction of the members of its protectionist wing, the major opposition to its economic nationalist approach would probably come from Republican lawmakers, backed by the GOP's allies in Corporate America, while the applause would come from many Democrats on Capitol Hill.

In fact, while President Trump has clearly won the 2016 election by embracing the America-First protectionist stands, the GOP establishment, including the majority of the Republicans in the Senate and the House of Representatives, continue to adhere to the traditional pro-free trade principles that their party adopted since the presidency of Ronald Reagan.

In a way, when pundits use the term "Reaganism" they refer, among other things, to the free trade policies pursued by President Reagan and his Republican successors at the White House and supported by his Republican fans on Capitol Hill.

If candidate Trump had lost the election and Hillary Clinton were occupying the White House and trying to push forward the Trans-Pacific Partnership (TPP) in Congress, she could have counted on the majority of Republican lawmakers to support the move, while facing strong opposition from most Democrats.

So it was not surprising that much of the criticism of President Trump's latest trade moves came from Republican lawmakers, astounded that President Trump would even consider imposing tariffs on metal and car imports, steps that run contrary to the party's free trade dogma.

NO REASON FOR PROBE

Hence, Foreign Relations Committee chairman, Senator Bob Corker from Tennessee, where Volkswagen and other foreign car makers have plants, argued that there was "no reason" to conduct a national security investigation of car imports. "This is a dangerous course and should be abandoned immediately," Senator Corker said in a statement.

Another staunch free trader, Republican Senator Pat Toomey from Pennsylvania, tweeted that President Trump was making his protectionist case "under the false pretence of national security" and that it "invites retaliation", while another leading Republican, Senator Orrin Hatch from Utah, chairman of the powerful Finance Committee, called the investigation into car imports "deeply misguided".

President Trump's decision to follow through on steel and aluminium tariffs against some of the US' closest allies has also ignited a wave of criticism by Republicans worried that a new trade war could undercut the strong impact tax reform has had on jobs and the economy.

"This is dumb," said Republican Senator Ben Sasse of Nebraska, a rising political star who may run for the presidency, and is a strong opponent of President Trump's trade policy. "We've been down this road before; blanket protectionism is a big part of why America had a Great Depression," he warned.

And while some Republicans expressed support for taking a tough stand during trade negotiations with China, many of them and their political allies in Washington expressed unease with the direction that the Sino-American trade relationship is moving. Or as US Chamber of Commerce president Thomas Donohue put it, the proposed tariffs on China amounted to "a tax on American consumers" and could erode American business competitiveness.

Democrats, on the other hand, are finding themselves in an interesting political dilemma. They are leading the political "resistance" to President Trump whom they bash as a "nativist", as an "isolationist" who has rejected America's traditional internationalist values.

But then members of the Democratic Party's progressive wing, including many young activists who wanted to see Vermont Senator Bernie Sanders as their presidential candidate in 2016, share the same populist and anti-globalist sentiments that have been echoed by President Trump and are opposed to the pro-free trade policies pursued by the most recent American presidents, including Democrats Bill Clinton and Barack Obama.

It therefore made sense that Democrats like Senator Sherrod Brown from Ohio, who have been railing against "unfair" trade deals for decades, welcomed President Trump's decision to impose tariffs on steel and aluminium imports as a way of stopping China from dumping steel into the US market, and who called the move "well overdue".

Senator Brown was joined by Democratic senators from other manufacturing states that went for President Trump in 2016, including Bob Casey of Pennsylvania and Joe Manchin of West Virginia, who applauded President Trump's protectionist approach. Senior Democratic Senator Chuck Schumer also said: "This outline represents the kind of actions we have needed to take for a long time, but the president must stick with it and not bargain it away."

And one of the reasons that Conor Lamb, a young Democrat, recently surprised many observers by winning a recent special election in a district outside of Pittsburgh that supported President Trump was that he marketed himself to voters by backing the Republican president's tough stand on trade.

Indeed, Democrats running for office in states like Pennsylvania, Ohio, Michigan - where white blue-collar workers, including many members of the traditionally pro-Democratic labour unions, helped deliver the last presidential election to the billionaire from New York - could turn out to be trusted political allies of President Trump as he tries to press ahead with his protectionist policies that are being opposed by many Republicans.