Practical Trumpism: Moving rhetoric to reality in American trade policy

Donald Trump, candidate, offered promises and hope to the long-neglected working people of this country in the course of his campaign, but the details have been nebulous.

{mosads}President-elect Trump must now deliver on his populist message; otherwise, struggling American workers may rebel against “the last straw” and take a hard left turn to full-blown European-style socialism — or worse.

But President-elect Trump really can move his campaign rhetoric into policy reality. Two small steps can help restore U.S. employment to better-paying wages and hobble the trade cheaters. It might not be the “red-meat” rhetoric that energized his campaign trail rallies, but it’s doable. More importantly, it will work.

Here are some ways the new President-elect can go from rhetoric to reality for the benefit of his supporters.

EXPORT OUR STRONGEST SECTOR

While high-skilled, high value-added manufacturing will always have a place in the U.S. economy, there is little to compel secure, high-wage, low value-added manufacturing work on U.S. shores.  Lower value-added, low-skilled, manufacturing, like textiles, clothing, and low-tech products, can’t support a US living wage and will inevitably go to developing nations.

In that respect, the linkage between manufacturing and employment is largely broken.

The type of robust, low skilled, high-wage, high value-added manufacturing that employed World War II’s veterans, the Baby Boomers and even some children of Boomers up to the mid-1980’s is long gone, largely replaced by robotics and the rigorous precision required for most high-value products.

Today, four of five Americans work in the service sector. Our trade statistics almost always show a deficit in the trade in goods, but a surplus in the trade in services. That’s because Americans do services exceptionally well: we innovate, we deploy, and we monetize services better than any country on the planet.

Incredibly, though, American trade pacts are almost uniformly directed at the trade in goods, not services.

Agreements covering the trade in services have been languishing for years. Meanwhile, the same countries with which we have a substantial deficit in the trade in goods prohibit US service providers from entering their national marketplaces, using non-tariff barriers like requiring the service provider to be locally licensed and owned.

As a consequence, the United States is losing contract opportunities at the border of those countries that export goods to the USA without any inhibitions whatsoever; indeed, we maintain “free trade” agreements with many countries that impose trade barriers on our exporters of services.

We are long overdue in being able to export our robust logistical, financial, design, actuarial, construction, software, architectural, accounting, transport, research and other services to many of the countries that swamp our markets with goods.

President-elect Trump should make clear that he will impose a moratorium on any future trade agreements that do not incorporate provisions for the trade in services where Americans lead the world.

INHIBIT CURRENCY MANIPULATION

While China is the most egregious currency manipulator, it is certainly not alone.

Japan has manipulated currency (even with our consent), and Germany has benefited tremendously from its stealth “currency manipulation” achieved through its membership in the Eurozone. (Germany actually has the greatest trade surplus relative to GDP of any nation in the world. It was recently added to a “watch list” of potential currency manipulators by the US Treasury Department.)

Even the United States could be accused of currency manipulation in its monetary policy.

The answer to currency manipulation, though, is not to target individual violators like China but, instead, to harmonize global standards for determining currency valuations among the nations of the world.  It would make a conflict with a currency manipulator not an “us-against-them” dispute, but an “us and the entire world against them” conflict.  (And alliances are as important in a currency or trade war as they are in a shooting war.)

Members of the International Monetary Fund (IMF) are already bound to fair currency practices. But while the IMF has rules, it does not have sanctions or an enforcement mechanism.

President-elect Trump should have his new Treasury Secretary convene a summit of both IMF and World Trade Organization (WTO) finance ministers to adopt WTO style sanctions to the IMF in order to ensure that markets, not governments, set relative currency valuations.

President-elect Trump has a substantial agenda before him to realize his campaign rhetoric as policy reality. It is made more difficult because it requires dealings with foreign nations that have largely benefited from current international trade practices.

But the populist and nationalist trend we have seen, really, since former Republican House Majority Leader Eric Cantor lost his House primary, are likely to create a realignment of the global order on trade that is clearer and fairer.

President Trump should make it a priority to lead the way of that realignment with distinctively American notions of generosity, fair play and equality.

Collins is the Managing Director of Stuyvesant Square Consultancy. He has previously written on U.S. trade policy for Forbes, The Daily Caller, the American Conservative, and various policy and political blogs