Hillary Clinton has claimed that Donald Trump‘s trade policies will start a “trade war” but what she fails to recognize is that we are already in one. Trump clearly sees it and he will work to put an end to it.
[Dan DiMicco| July 19, 2016 |CNBC]
With some nations exercising mercantilism — predatory export pricing and massive protectionism at home — and not following the rules of trade agreements in place, we are essentially already in a trade war and have been for two decades. And, as far as I’m concerned, the U.S. has yet to show up to fight in this war.
This very mercantilism has not only undermined the concept of free trade but destroyed it. And China is the 8,000-pound gorilla when it comes to such self-interested and trade-distorting tactics.
Tactics such as currency manipulation, massive subsidies to export-related industries, the use of a “border-adjustable” tax system — that works both as a tariff barrier for inbound goods and a subsidy mechanism for targeted export products — and the state-owned nature of many of the companies involved have acted to promote this mercantilist trading behavior.
The countless free-trade agreements the U.S. has put in place have failed America, its economy, and its workers. The three worst agreements were giving China “favored nation trading status,” allowing China’s entry into the World Trade Organization, and the North American Free Trade Agreement. What makes them so damaging is the rules of these agreements have been ignored and not enforced or they have been outright circumvented.
And it’s not just the U.S. that is fed up. In a recent Wall Street Journalarticle titled, “China’s One-Way Deals Grate on Germany,” reporter Andrew Browne explains that German Chancellor Angela Merkel is losing patience with China buying western technology and brands, but then keeping its own markets closed.
Trump gets it. He knows that it is past time to put an end to this attack on the U.S. and other economies, on job creation, on manufacturing, on national security and on the future of the middle class.
Trump would do this by negotiating from a position of strength, not condescending weakness. China respects strength but takes full advantage of weakness. In the end it will be in China’s best interest to stop its questionable trade tactics.
Trump’s trade policies will include legal tariffs (if necessary), renegotiation, declaring China a currency manipulator which will allow us to bring action against them, proactive filing of trade cases with the International Trade Commission and World Trade Organization and more. Success in these areas will put an end to this trade war and restore a level playing field. It will give free trade the opportunity to succeed.
Trump gets what Clinton doesn’t: You don’t win a trade war with appeasement or more free-trade agreements. In particular, you can’t win one if you refuse to acknowledge it even exists!
Commentary by Dan DiMicco, the former CEO of Nucor and a Trump campaign advisor on trade. He is also the author of “Steeling America’s Future” and “American Made: Why Making Things Will Return Us to Greatness.” Follow him on Twitter @DanRDimicco.