From his campaign for president to his current Twitter feed, President Trump has clearly outlined goals for his presidency. Two of the most prominent of these are A) pushing back on China’s unfair trade policies and B) building a wall along the southern border. But the government shutdown has pitted these two goals against each other.
The crisis of illegal activity at our Southern Border is real and will not stop until we build a great Steel Barrier or Wall. Let work begin!
— Donald J. Trump (@realDonaldTrump) December 22, 2018
Trade negotiations are continuing with China. They have been making hundreds of billions of dollars a year from the U.S., for many years. Stay tuned!
— Donald J. Trump (@realDonaldTrump) May 15, 2018
The trade war, waged with mutually damaging tariffs, is essentially a game of chicken. To win, Trump is betting that the U.S. economy can take more of a hit than China’s. The idea is that enough economic stress will push Beijing to agree to the demands laid out by the Trump administration that will lead to better and more fair trade practices.
The problem, of course, is that for this strategy to work, the U.S. has to actually have a stronger economy.
Instead of working to lift the economy, however, Trump has allowed his fight over funding for the border wall to shut down significant parts of the federal government — harming the very economic strength that he needs to wage his tariff fight with China.
Already the shutdown has left hundreds of thousands of federal workers and contractors without pay, overworked airport security, limited services from the IRS, halted movement on regulatory and investigative functions leaving businesses in limbo, and even cut trade war aid to farmers in addition to affecting industries that depend on patronage from now-unpaid federal workers.
At bottom, the furlough means that able-bodied adults aren’t working. That’s a loss of productivity, which shrinks the economy.
According to a Global S&P Ratings Report, the economy loses about $1.2 billion a week because of the shutdown. And on Tuesday, the grim numbers reportedly pushed the White House to up the estimated the cost of the shutdown to about 0.1 percent growth each week — double its initial assessment.
That’s real damage to an already stressed economy, which translates into increased leverage for Beijing. And, the longer that Trump refuses to consider ending the shutdown, the more the economy loses and the more Beijing gains.
Ultimately, Trump will likely have to pick between these two, now rival, objectives.
When that time comes, he would do well to pick a stronger economy and the fight against the very real problems presented by trade with China over the wall, a poor solution to cutting illegal immigration.
Even beyond the current trade war, the U.S. needs its economic strength and government functionality to push back against aggression in the South China Sea, military capabilities that could well give China regional dominance, as well as its growing network of political and economic influence.
Those threats posed by a rising and increasingly militant China are far greater than migrants crossing the border.
