1. Donald Trump and Mr & Ms America: Republican harvesting voters’ support by blaming trade deals

Donald Trump and Mr & Ms America: Republican harvesting voters’ support by blaming trade deals

Barely 24 hours before their first presidential debate on September 26, Hillary Clinton and Donald Trump were neck-and-neck in the Bloomberg Politics national poll.

By: | Updated: October 3, 2016 6:40 AM
Inclusion of third party candidates put Donald Trump marginally ahead—an unimaginable outcome for many, given the scepticism for Trump in the mainstream media and among intellectuals. (Reuters)

Inclusion of third party candidates put Donald Trump marginally ahead—an unimaginable outcome for many, given the scepticism for Trump in the mainstream media and among intellectuals. (Reuters)

Barely 24 hours before their first presidential debate on September 26, Hillary Clinton and Donald Trump were neck-and-neck in the Bloomberg Politics national poll. Inclusion of third party candidates put Donald Trump marginally ahead—an unimaginable outcome for many, given the scepticism for Trump in the mainstream media and among intellectuals. While Hillary Clinton performed better in the first debate on most issues, particularly her core strengths of foreign policy, race, and gender empowerment, it is difficult to say whether in the next few weeks, she would move as much ahead of Trump as she would wish to. The fact of the matter is that Trump has caught up with his rival, notwithstanding the scorn and contempt showered on him by media, reflecting his traction with several American voters. The latter, clearly, comprise not only the low-skilled white voters, but also from other economic and ethnic groups comprising what his campaign calls ‘Mr and Ms America’.

‘Mr and Ms America’ resonates loud in Trump’s Economic Plan document prepared by economic experts Peter Navarro and Wilbur Ross, both campaign advisers to Trump. The paper is an attempt to demystify Trump’s agenda for reviving America’s economic greatness. It distinguishes between interests that have served Corporate America well but left ‘Mr and Ms America’ unhappy. And for much of that unhappiness—Trump and his advisors conclude —American trade policies are responsible.

It is remarkable that a Republican pesidential candidate has so much antipathy for trade and is devoting such enormous energy in taking on his opposition on trade. His main economic critique of the Obama-Clinton economic model is its emphasis on ‘bad’ trade deals. These have encouraged American businesses to invest overseas for taking advantage of cheaper factors of production abroad, particularly low wages, resulting in large loss of investments and jobs for America. These have also permitted tariff-free imports into America allowing some of its trade partners to swamp the American market with cheap stuff. They have also allowed some of America’s largest trade partners, like China, to manipulate currencies for keeping export prices low. The result of all these, the Trump Economic Plan argues, has been to run up huge deficits against all major trade partners, loss of manufacturing jobs and national income. As the document points out, corporates taking advantage of the trade deals have gained, while Mr and Ms America have lost.

Trump believes America’s economic revival can come by increasing exports, reducing imports, cutting out the trade deficit, creating more manufacturing jobs with high wages, reducing regulations and cutting federal taxes. For doing all these, it is important to renegotiate the bad trade deals. Once American businesses see the deals renegotiated, they would look inward and invest at home, incentivised by lesser regulations and lower corporate taxes. That would revive manufacturing output and local jobs. The Trump campaign is particularly unhappy with the NAFTA and the Korea FTA, both of which are argued to have led to loss of thousands of jobs.

But Trump’s also heavily cut up with the WTO for two reasons. First, he feels Bill Clinton did incalculable damage to the US by facilitating China’s entry at the WTO in 2001, which paved the way for decline of American exports and begun its days of deficit. Second, WTO members impose VAT on US exports into their countries, while refunding VAT on their own exports to the US, making the US exports more expensive. This ‘unequal’ treatment of the US, which operates on income tax and most of the rest of the WTO members on VAT, has been maintained by the WTO. Trump would like to use the position of the US as the world’s largest economy, consumer and importer to correct the situation. While the Plan does not mention whether Trump may pull the US out of the WTO, it does mention ‘Without the US as a member, there would not be much purpose to the WTO’.

Notwithstanding the great deal of labour put in the Economic Plan on trade angst and bad trade deals, there are two surprise omissions: TPP and immigration. Neither find a single mention in the document. China and Mexico are mentioned several times as beneficiaries of bad US trade policies. China is singled out for further damages: it is mentioned as a currency manipulator along with Germany and Japan for continuously buying US treasury bonds for devaluing currencies and is accused of trade cheating along with dumping of steel in global markets—a charge that the Plan makes for India, Italy, Korea and Taiwan as well.

Despite losing thunder to his rival in the first debate, Trump probably knows, however banal his anti-trade rhetoric might be for policy elites and intellectuals, it is working with his backers. While leading Trump on most domestic and foreign policy issues, Ms Clinton hasn’t yet been able to provide a convincing rebuttal to Trump’s manic anti-trade tirade directed at fetching Mr and Ms. America votes. Trump would be sincerely hoping she can’t till November 8.

The author is senior research fellow and research lead (trade and economic policy) at the Institute of South Asian Studies in the National Universit of Singapore. E-mail: [email protected]; Twitter: @Amitendu1.

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