Rural America voted for President Trump in a 3-to-1 margin in hopes that a newcomer to the White House could defray stagnant economic conditions. Now, as the president’s trade policies start to squeeze the farming and manufacturing communities who cheered his election two short years ago, these Americans are left to wonder whether the man they sent to Washington still has their backs.
Trump has publicly expressed support for “zero tariffs” in trade negotiations, so actions the administration takes to the contrary are increasingly perplexing, given how strong their economic damage is on his base. Recently, some have wondered if the ambiguity in the Trump White House’s trade agenda are due less to the president’s own preferences and owe more to the ambitions of one particular unelected bureaucrat who has the President’s ear: Trump’s top trade advisor, Peter Navarro.
Data show that the steel and aluminum tariffs imposed by the administration could cost as many as 400,000 American jobs, far outstripping any jobs purportedly saved by protectionist policies. And as a 25 percent tariff goes into effect today on $16 billion worth of additional Chinese goods, the 1.7 million Americans whose jobs rely on trade with China have cause to wonder whose aims the administration’s trade tactics, driven by Navarro, serve.
Trump’s approval among his voters remain high, but the downward pressure his reactionary trade practices have put on the economy are even more certain: The Federal Reserve reported in June that businesses were anticipating scaling back or reversing plans to invest in new capital as a result of trade uncertainty, despite new incentives in the tax law.
The dulling of economic enthusiasm portends peril for the president. The midterms will be seen as a mandate for his governing agenda, so while it would be anachronistic for Congress to flip control at a time of such low employment and robust economic health, the message of a fundamentally strong economy increasingly conflicts with the anxieties caused by a multi-front trade war.
And a muddied economic message could have catastrophic effects for Republicans in November. Though Nancy Pelosi and her Democrat colleagues have tried to cast Trump’s pivotal achievement of tax reform as “crumbs” or a corporate giveaway, Americans at every income level and in every state saw their taxes decline as result of the Tax Cut and Jobs Act. The tight labor market means workers can find a new job if they don’t like the one they have, and Americans are saving more than they have in over a decade. Unable to argue that the last 10 years of stagnant wage growth and no job prospects is an appealing vision for the future, Pelosi and her congressional Democrats have little to offer Americans who wonder which party has their fortunes at heart.
In fact, Democrats would be in big trouble if not for the poorly-devised trade practices that are causing anxiety in an otherwise gangbusters economy. Now, nearing what could have been a landslide mandate for the Trump agenda, the president is instead allowing mixed actions on trade to dilute his message of economic empowerment.
A groundbreaking expose in Time Magazine provides insight into how the party whose president promised to make America competitive again is somehow in danger of losing control of Congress to the party that thinks America was never that great.
The answer lies in the bad advice the commander-in-chief is getting from someone who enjoys a role in his inner circle but has spent years cozying up to Democrats and disparaging broad swaths of the coalition that sent Trump to the White House.
Little-regarded in Washington circles prior to Trump’s arrival, Peter Navarro has been attempting to make a political name for himself for decades. The reason no Republicans in D.C. had heard of him was simple: He’s a Democrat, and a well-connected one at that. In fact, his 1996 campaign for Congress for a seat representing San Diego was supported by another well-known Californian: Nancy Pelosi. Indeed, Navarro lavished praise on Pelosi at the 1996 Democratic National Convention, calling her “street-smart.” That descriptor that looks especially prescient now that the liberal Democrat she supports in Navarro is something of a Trojan horse for protectionism in a Republican White House.
Navarro’s political ambitions were also aided by President Bill Clinton, who cut a campaign ad for the self-proclaimed “progressive” and Hillary Clinton, who flew to California to headline a Navarro campaign event.
Given that Trump himself has not always expressed fealty to the GOP, this may not seem noteworthy. But the political past of White House personnel may be of greater interest now that the policies and practices being implemented at the behest of one senior aide stands to undermine everything Trump has accomplished in his short two years in Washington.
The stock market broke records this week as it entered into the longest bull run in history buoyed by developments on trade. Observers had expected announcements today that the U.S. and Mexico had reached consensus on a number of provisions to update NAFTA, a breakthrough the administration has optimistically previewed for weeks. This on the same day Chinese officials arrive in Washington to restart negotiations after several months of tariff machinations. Yet just a couple of months ago, Navarro was insisting these developments were devastating to the United States — in an interview he claimed, “we lost the trade war decades ago. Once we entered into NAFTA and let China into the WTO.”
While Trump has expressed dismay for decades about the perceived disadvantage international trade practices exert on the U.S., his aim has always been to secure the best deal for Americans. In contrast, Navarro has a long history of supporting spurious economic policies that inflict demonstrable harm to Americans — he recently commended President Barack Obama’s “stimulus” spending and debt package, and for decades called for even more progressivity in the tax code (Navarro called the Reagan tax cuts — the precursor to Trump’s signing of the Tax Cut and Job Acts — the “biggest rip-off of all time”).
With the typical American family receiving more than $2,000 a year in tax cuts as a result of Trump’s tax bill, this out-of-touch thinking is quite at home in Pelosi’s San Francisco millionaire circles, but is a curious position for someone who shares Trump’s ear on economic policies.
President Trump secured a historic rewrite of the tax code — he should be cautious of counsel he gets from anyone whose advice serves to undermine that.
Mattie Duppler (@MDuppler) is a contributor to the Washington Examiner’s Beltway Confidential blog. She is the senior fellow for fiscal policy at the National Taxpayers Union. She’s also a visiting fellow at the Independent Women’s Forum, and the president of Forward Strategies, a strategic consulting firm.
