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With Lighthizer and Navarro, Trump Administration Puts China on Notice

iconJan 5, 2017 11:36
Trump meant business when he said his administration would pursue better deals for the American people.

by Jeff Yoders on JANUARY 4, 2017

As President-elect Donald Trump fills out the remaining cabinet posts in his administration before taking office in a little more than two weeks, it’s become abundantly clear that Trump meant business when he said his administration would pursue better deals for the American people.

Recently, Trump named University of California-Irvine Economist Peter Navarro, the co-author of the trade “Death by China” as head of his newly created National Trade Council. He also received widespread praise from the domestic steel industry for naming longtime trade attorney and former Reagan administration official Robert Lighthizer as the new U.S. Trade Representative. If there really was any doubt going in — and, after that campaign, who really thought there was? — it’s become obvious that Trump does, indeed intend to go after China on its trade policies and possibly even upend existing trade deals such as NAFTA.

In addition to being a longtime China critic, Navarro is an interesting appointment by Trump because he also happens to be a democrat. Trump’s populist policies were always built for a general election win and they eschewed traditional republican stances that supported free trade and, generally, trade pacts such as NAFTA.

In realigning the GOP as a workers’ party, Trump won states such as Michigan and Pennsylvania that no republican had won in 28 years. So, it’s not really surprising that some democrats in congress and even AFL-CIO President Richard Trumka also signing on to help Trump renegotiate NAFTA.

AFL-CIO, Democrats Vow to Help Redo NAFTA

At a press conference on Capitol Hill, held at the start of the 115th Congress, Trumka and several House democrats vowed to, yes, help Trump renegotiate NAFTA… but also said they’d hold him to his promise to renegotiate it.

“Trump said he wants to fight for trade deals that put American workers first, and so do we,” said Oregon Rep. Peter DeFazio. “We are going to give very strong support for rewriting NAFTA. The momentum for a new direction is very, very clear and growing.”

It’s been documented how well working-class voters turned out for Trump, so it’s not surprising that he’s spent much of the period between his election and when he will eventually take office meeting with business leaders and taking credit for either keeping jobs in the U.S. or, in the case of Ford Motor Company yesterday, credit for the automaker canceling a planned new facility in Mexico and, instead, investing $600 million and 700 new jobs in that red state, Michigan.

As much as Trump’s trade team might send chills down the spine of Mexico and others in the NAFTA region, it’s really China who should be worried about what the next four years portend. The nation’s biggest trade deficit is with China… and that means China has the most to lose.

Trump’s Trade Team

It’s one thing to campaign as an outsider railing against the status quo, but with Navarro and Lighthizer on board, Trump is very much signalling he intends to govern as a change agent for U.S. trade. In addition to Navarro’s book about trade with China, Lighthizer is one of the most sought-after attorneys in Washington when it comes to representing companies seeking to file anti-dumping and countervailing duty actions. His knowledge of the arcane processes of filing and litigating trade cases is likely unparalleled, including little-known processes such as proving a section 301 case.

In the ’80s, Lighthizer was a deputy U.S. Trade Representative in the Reagan administration. Back then, he helped to stem the tide of imports from Japan with threats of quotas and punitive tariffs.

“A very good appointment,” said Harry Moser, founder and president of the Reshoring Initiative, a non-profit that seeks to bring good-paying manufacturing jobs back to the U.S. “He understands that trade will be more free when the playing field is balanced. Balance requires that other countries stop manipulating trade and the U.S. takes responsibility internally. To make the U.S. a desirable home for manufacturing we need a mix of: much better skilled workforce; VAT or border adjustment tax; lower corporate taxes, regulations, healthcare costs and U.S. dollar; and tariffs as high as those in other countries.”

If Lighthizer is a Washington insider who knows all the ins and outs of international trade law and how to apply it, however, Navarro is an economic theorist who has argued for decades that China is taking advantage of trade laws and that the U.S., to use Trump’s words, needs better deals.

Navarro has argued, in his books and his teaching, that China practices a perverse form of capitalism that undermines the U.S. economy by working hand in hand with U.S. corporations against America’s long-term interests. He says China helps individual U.S. companies in the short term by providing them with cheap workers.

He has also written that China picks off U.S. industry, jobs and know-how and uses them against the U.S., not without evidence. Navarro further says that U.S. corporations pay money to Congress through lobbyists to make sure things stay the way they are. His belief that the trade deficit between the U.S. and China is a “disaster” is gaining acceptance from Washington insiders as we speak. We should also note here that much of MetalMiner, itself, is banned on China’s internet due to the fact that we report on trade issues regularly.

Commerce Secretary

Despite the experience and strong beliefs of both Navarro and Lighthizer, neither will be strongest voice for U.S. trade in the Trump administration. That role is almost certain to fall to Commerce Secretary nominee and Navarro’s sometime writing partner, Wilbur Ross, a private equity investor, billionaire and trustee of the Brookings Institution.

So, in a little more than two weeks we will go from an administration whose Commerce Department is led by Penny Pritzker to one led by Ross, with key roles for Navarro and Lighthizer who will lead a council that did not even exist in the Obama administration. The U.S. trade representative that Lighthizer will replace, Michael Froman, leads an office that currently has a website whose opening page extols the virtues of the now surely dead-in-Congress Trans-Pacific Partnership with the words, I swear these are not being used in jest, “Made in America.”

Something makes me think Trumka or DeFazio would not approve.

Back in June, we wrote that Trump’s campaign was making manufacturing more of an issue in the presidential election since any after 1992. Now, it appears that trade and manufacturing will be a main domestic focus of his presidency. The times, they are a changin’…

Global Trade
Public Policy

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