By William Reinsch
I was going to write about something else this week, but President Trump’s inaugural address compels me to comment on that instead. It was not your typical address focused on optimism and national unity. The fact that it tracked his campaign speeches so closely suggests that this is someone who is not going to change very much now that he’s in office. What we saw in the campaign is what we’re going to get. From a trade perspective, there were three things he said that deserve comment — “America First,” “Buy American,” and “Hire American.” None of these are new, but their return to center stage is disturbing for a number of reasons, the main one being they all reflect a very narrow and short-term view of what is good for America.
America First
“America First” has a long history in the United States, much of it unsavory. The last time it was popular was in the 1930s as the slogan of those who opposed U.S. entry into World War II, either because they were isolationists or because they supported Hitler as a bulwark against Stalin, whom many people at the time regarded as the greater evil. Pearl Harbor effectively put an end to that — until now. What Trump means by “America First” remains to be seen, and that will probably unfold over time. If it means withdrawing from U.S. engagement with the world, then it comes too late, as I said last week. That train left the station 40 years ago.
If it means something positive like an infrastructure program and emphasis on domestic economic growth, then it will attract a lot of support. Most worrisome is that it implies the win-lose zero-sum mentality that he evidenced in the campaign. For America to win, somebody else has to lose. If America is to be first, then somebody else needs to be last. That alone would be a sharp change in U.S. post-WWII policy which has been based on promoting global growth to the benefit of all. That has not been entirely altruistic.
The post-war world the U.S. helped design and implement has worked to America’s advantage — one of the reasons why the Chinese and the Russians are less than enthusiastic about parts of it. Abdicating leadership at this point would undermine the structure the United States has so painstakingly built and would cost the U.S. dearly in the long run. We are already seeing this regionally as nations gravitate toward China in the wake of TPP’s demise. America First would also signal an end to what has been one of America’s great virtues and the key to its “exceptionalism” — its generosity.
Buy American
“Buy American” is also not new. The Buy America Act dates to 1934. What is missing is the other half of the equation. Buying American is not enough. We also have to sell American, which means exports, if we want our economy to grow. Pro-export lip service is standard practice for new administrations, but the true test on exports will come with the president’s decision on what to do about the Export-Import Bank and on whether he is prepared to be as aggressive in pressing other countries to buy our products as he has been in pressing our companies not to move away. That used to be called commercial diplomacy, and the need for it is greater than ever (this ignores the feasibility of that tactic if Trump imposes tariff increases against the same countries he is asking to buy more).
Hire American
“Hire American” is not new either. It was the unfortunate American way for a long time to either keep people out of the country or to discriminate against them once they got in. Immigration policy has never shown the U.S. at its best, and it looks like that is not going to change in the new administration. What has changed, however, is that despite the new president’s commitment to jobs for unemployed Americans, there is growing evidence that, far from having too many workers, we don’t have enough. That’s what I was going to write about this week — how demography trumps everything over the long term — and I’ll get to that in a future column.
More major shifts on U.S. trade policy loom with President Trump expected to direct the renegotiation of NAFTA as soon as this week. So far, forward movement by the Trump administration on trade has resulted in backwards movement for America’s global economic leadership. The ride may soon get bumpier.
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William Reinsch is a Distinguished Fellow with the Stimson Center, where he works principally with the Center’s Trade21 initiative.
A Trade Perspective on Trump’s Inaugural Address
By William Reinsch
In Trade & Technology
By William Reinsch
I was going to write about something else this week, but President Trump’s inaugural address compels me to comment on that instead. It was not your typical address focused on optimism and national unity. The fact that it tracked his campaign speeches so closely suggests that this is someone who is not going to change very much now that he’s in office. What we saw in the campaign is what we’re going to get. From a trade perspective, there were three things he said that deserve comment — “America First,” “Buy American,” and “Hire American.” None of these are new, but their return to center stage is disturbing for a number of reasons, the main one being they all reflect a very narrow and short-term view of what is good for America.
America First
“America First” has a long history in the United States, much of it unsavory. The last time it was popular was in the 1930s as the slogan of those who opposed U.S. entry into World War II, either because they were isolationists or because they supported Hitler as a bulwark against Stalin, whom many people at the time regarded as the greater evil. Pearl Harbor effectively put an end to that — until now. What Trump means by “America First” remains to be seen, and that will probably unfold over time. If it means withdrawing from U.S. engagement with the world, then it comes too late, as I said last week. That train left the station 40 years ago.
If it means something positive like an infrastructure program and emphasis on domestic economic growth, then it will attract a lot of support. Most worrisome is that it implies the win-lose zero-sum mentality that he evidenced in the campaign. For America to win, somebody else has to lose. If America is to be first, then somebody else needs to be last. That alone would be a sharp change in U.S. post-WWII policy which has been based on promoting global growth to the benefit of all. That has not been entirely altruistic.
The post-war world the U.S. helped design and implement has worked to America’s advantage — one of the reasons why the Chinese and the Russians are less than enthusiastic about parts of it. Abdicating leadership at this point would undermine the structure the United States has so painstakingly built and would cost the U.S. dearly in the long run. We are already seeing this regionally as nations gravitate toward China in the wake of TPP’s demise. America First would also signal an end to what has been one of America’s great virtues and the key to its “exceptionalism” — its generosity.
Buy American
“Buy American” is also not new. The Buy America Act dates to 1934. What is missing is the other half of the equation. Buying American is not enough. We also have to sell American, which means exports, if we want our economy to grow. Pro-export lip service is standard practice for new administrations, but the true test on exports will come with the president’s decision on what to do about the Export-Import Bank and on whether he is prepared to be as aggressive in pressing other countries to buy our products as he has been in pressing our companies not to move away. That used to be called commercial diplomacy, and the need for it is greater than ever (this ignores the feasibility of that tactic if Trump imposes tariff increases against the same countries he is asking to buy more).
Hire American
“Hire American” is not new either. It was the unfortunate American way for a long time to either keep people out of the country or to discriminate against them once they got in. Immigration policy has never shown the U.S. at its best, and it looks like that is not going to change in the new administration. What has changed, however, is that despite the new president’s commitment to jobs for unemployed Americans, there is growing evidence that, far from having too many workers, we don’t have enough. That’s what I was going to write about this week — how demography trumps everything over the long term — and I’ll get to that in a future column.
More major shifts on U.S. trade policy loom with President Trump expected to direct the renegotiation of NAFTA as soon as this week. So far, forward movement by the Trump administration on trade has resulted in backwards movement for America’s global economic leadership. The ride may soon get bumpier.
___
William Reinsch is a Distinguished Fellow with the Stimson Center, where he works principally with the Center’s Trade21 initiative.