Donald Trump is speaking with two voices on trade, one of the hot-button issues that propelled him to victory on Election Day.
Trump, the incoming president, alarmed free traders with protectionist rhetoric during the campaign, vowing to impose tariffs on Chinese imports and invoke other punitive measures if the nation’s trade deficit doesn’t improve. He has now backed that rhetoric by naming economist Peter Navarro to a new group called the White House National Trade Council. Navarro, a business professor at the University of California, Irvine, is the author of “Death by China” and many other books and articles claiming that Chinese mercantilism is decimating the US economy. He co-authored candidate Trump’s economic plan and fueled many of his protectionist ideas.
Business groups hate Trump’s threat to shake up US trading relationships, since that would likely provoke retaliatory measures by China and other trading partners subject to new US restrictions. Most Fortune 1000 companies have some exposure to the Chinese economy. Navarro’s ideas, if implemented, could shut down an important source of growth for those businesses and thousands of smaller companies dependent on them.
But the hawkish Navarro is an outlier, even in the Trump administration. Other Trump nominees are more comfortable with free trade and loath to risk a trade war with China, or anybody. Private-equity billionaire Wilbur Ross, Trump’s pick to head the Commerce Department, insists there will be no trade wars and says the main effort will be urging other countries to buy more US products. Ross has personally benefited from relatively free access to the Chinese market, and he knows how tit-for-tat sanctions would hurt American companies and the US economy.
Trump’s Treasury nominee, Steve Mnuchin, is a Goldman Sachs alum and Wall Street establishmentarian who seems unlikely to threaten the global economic order that has enriched the shareholder class. And Trump’s pick to be ambassador to China, Iowa Gov. Terry Branstad, comes form a state that has benefited from open trade with China and other countries through agricultural exports that account for 22% of the jobs in Iowa.
So Trump has set up a dichotomy on trade within his own economic team. The Trump transition team says Navarro’s trade council will generate “innovative strategies in trade negotiations,” study the evolution of the manufacturing sector and find better ways to match blue-collar workers with available jobs.
On paper, such councils are subordinate to Cabinet-level officials such as the Commerce and Treasury secretaries. So Navarro will be an adviser while Ross and Mnuchin will be policymakers more likely to determine final outcomes. Trump, of course, will be the ultimate decider, and Navarro or anybody else inside or outside the White House could end up being more influential than Ross or Mnuchin, if he or she gets Trump’s ear at the right time.
But Trump may be setting his economic team up for internal dissension if Navarro and his council feel ignored, or if Trump’s Cabinet picks feel undermined by lower-ranking White House operatives. Few administrations escape first-year palace intrigue as various appointees jockey for power, and Trump’s freewheeling, unconventional approach could generate more fireworks than usual. A year from now, whoever is still around can probably be declared the winner.
Rick Newman is the author of four books, including Rebounders: How Winners Pivot from Setback to Success. Follow him on Twitter: @rickjnewman.
