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HORIST: It is not a trade war … yet.

HORIST: It is not a trade war … yet.

In its efforts to undermine the Trump presidency in every way possible, Democrats and the #NeverTrump media resistance movement spin every event to the extreme negative.  There is no objectivity in their uncompromised prosecutorial efforts.  Were one to be totally ignorant of trade issues and only consume the reports found in the left-wing media cabal, one would likely believe that President Trump is declaring a unilateral trade war on the rest of the world – and that it will be a disaster for the United States.  Nothing could be further from the truth.

As a lifelong conservative, I am totally an advocate of free trade.  The freer, the better.  This has not been the position of the old guard Washington establishment.  Looking at the Democrats, it appears that Trump has pulled off something just short of a political miracle.  He has actually gotten the Democratic Party to abandon its longstanding support of organized labor and the union’s pro-tariff policies. Suddenly, everyone on both sides of the aisle is a free trader.

Republicans have been consistent advocates of free trade in their speeches, but not so much when it comes to action.  While they have paid lip service to the principle, they have been lacking in turning principle into policy.

There is also common agreement that the United States has been disadvantaged by trade policies for many years.  The most notable example has been China, that routinely violates accepted standards of fair trade.  They place very high tariffs on goods coming in from the United States and other western nations.  They often subsidize exports in a number of ways, including paying shipping costs. 

They impose extraordinary costs and inhibiting red tape on foreign businesses locating in China – although they have loosened up on the more Draconian policies of the past.  They still ban foreign investment in business sectors that they deem to be critical to national security, including natural resources, communications and certain tech industries.

China’s most flagrant abuse is the theft of intellectual property.  The problem has been going on since Mao Zedong lifted the Bamboo Curtain and allowed China to become part of the world trade community.  The most serious problem has been China’s propensity for reverse engineering critical electronic and high-tech products in order to produce identical components.  They also use their intelligence community to steal industrial secrets by old fashion spying and by more modern cyber hacking.  It was recently reported that China obtained our most sensitive Navy development plans.

More obvious to the consumer are the Chinese iconic “knockoffs.”  On Wangfujing — the main walking street of Beijing – there is a Rolex shop where people can purchase the real McCoy for tens of thousands of dollars.  Around the corner is a street merchant who sells a very convincing knockoff for around twenty bucks – and less convincing ones for five. 

The fact that trade abuses have been part of China’s operation to such an extent and for so long has more to do with the old guard Washington establishment.  They allowed it to happen.  Trump has a point when he says he does not blame the Chinese – or any other nation that takes advantage of America.  He blames those who did nothing to stop it – at least nothing more than complain.

The problem with the critics of Trump’s trade policies is that they have no solution – just as they had no solution for decades.  Since they are the architects of the status quo, they would continue the status quo.  The only problem is that without proactive policies, the situation does not remain static.  It gets worse – just as it has with North Korea.

The #NeverTrump community claims that the President is starting a trade war, but it seems that he is responding – retaliating, if you prefer – to unfair tariffs imposed on the United States.  He has said repeatedly that he wants to reduce or eliminate all tariffs.  During the G7 meeting, he proposed that the nations with the biggest economies eliminate all tariffs.  They rejected the proposal out of hand.

In their usual anti-Trump fits of hyperbole, the media is already calling the situation a trade war.  That is just partisan political nonsense – just as it is in calling the temporary travel ban on seven nations a Muslim Ban. 

Since nothing else has worked in the past, Trump is imposing tariffs in a game of high-stakes negotiations.  He understands that tariffs and trade wars are bad for everyone.  He also understands that they are especially bad for all the nations that have tariffs against American products.

The United States has the biggest and the strongest economy in the world at this moment.  Our projected growth rate is an astounding 4-plus percent in the second quarter.  That is almost double what the old guard experts predicted was even possible.  IF there was ever a time to retaliate against all those egregious tariffs, this is the time.

Yes, there will be a modicum of pain for American consumers in terms of price increases.  It will not be very dramatic for the individual or the family.  Tariffs may result in some competitive disadvantage to American exporters, but the real impact is yet to be determined.  We must keep in mind that our farm products are desperately needed in many nations, including China.  It is more than likely that exports will remain high despite the tariffs other nations impose.

The best outcome, of course, is the renegotiation of all trade relationships where the United States is disadvantaged.  That seems to be Trump’s objective.  His trade policies involve so many nations – which is what scares the old guard – because Trump is setting a uniform policy even as he negotiates one-on-one.  The underlying principle is drop your tariffs and we drop ours.

While China is talking tough in round one, the reality is that American tariffs will hurt their economy more than ours.  Their stock market is losing value.  Their massive military buildup is skimming the cream off their private sector tax profits.  We are China’s biggest market.  If exports from China slow because of tariffs, their economy takes a huge hit.  They know that, so they most likely will have to cave.

The #NeverTrump people argue that the tariffs on our allies will (1) undermine a critical working relationship on all levels and (2) result in a closer trade relationship with China.  America gets cut out, they say.  Highly unlikely.  Europe has the same problems with China that we do.  We are bound by a common cause that the intramural negotiations between the United States and Europe cannot disrupt.  China has already been rebuffed on an attempt to create a special trade relationship with Europe.

The Trump resistance movement is so eager to bring down his presidency that they declare disastrous defeat long before the results are in.  Applied to baseball, they are reporting the winner and the score in the first half of the first inning.  This may give them some political points in the short term, but they could wind up with a henhouse full of egg on their collective face in the future.

One can never be certain of the future, but it is my opinion that there will not be a real trade war and China, Europe, Canada and Mexico will eventually agree to a trade policy that is fairer to the United States.  Maybe not everything Trump wants, but better than what we have now.

About The Author

Larry Horist

So,there‘tis… The opinions, perspectives and analyses of Larry Horist Larry Horist is a businessman, conservative writer and political strategist with an extensive background in economics and public policy. Clients of his consulting firm have included such conservative icons as Steve Forbes and Milton Friedman. He has served as a consultant to the Nixon White House and travelled the country as a spokesman for President Reagan’s economic reforms. He has testified as an expert witness before numerous legislative bodies, including the U. S. Congress. Horist has lectured and taught courses at numerous colleges and universities, including Harvard, Northwestern, DePaul universities, Hope College and his alma mater, Knox College. He has been a guest on hundreds of public affairs talk shows, and hosted his own program, “Chicago In Sight,” on WIND radio. Horist was a one-time candidate for mayor of Chicago and served as Executive Director of the City Club of Chicago, where he led a successful two-year campaign to save the historic Chicago Theatre from the wrecking ball. An award-winning debater, his insightful and sometimes controversial commentaries appear frequently on the editorial pages of newspapers across the nation. He is praised by readers for his style, substance and sense of humor. According to one reader, Horist is the “new Charles Krauthammer.” He is actively semi-retired in Boca Raton, Florida where he devotes his time to writing. So, there ‘tis is Horist’s signature sign off.