On August 6, the good people of Winnsboro, S.C., learned what it means to be a part of Trump trade adviser Peter Navarro’s GDP “rounding error.” That was the day consumer electronics producer Element Electronics gave notice to 126 people that, because of tariffs imposed by the Trump administration on components from China, the plant would begin layoffs in October.
Earlier in the summer, in a CNBC White House interview about the potentially harmful effects of tariffs, Navarro claimed that China and the United States are massive economies and the tariffs are just peanuts by comparison: “We got two economies that add up to around U.S. $30 trillion in annual GDP. The amount of trade we’re affecting with the tariffs is a rounding error compared to that.”
A rounding error? Sure, 126 people may not make a dent in a national measurement like GDP, but each one of them is fundamentally important in both a moral and constitutional sense. Our government has a responsibility to protect citizens, not to deliberately impose costs on them— unless, of course, the cost is justified in pursuing a greater good.
In this case, the number of people affected looms large because of other severe employment blows suffered by their community. A few months earlier, Winnsboro was hit hard with the loss of 5,000 jobs when construction on a nearby nuclear power plant was halted due to severe cost overruns, the bankruptcy of its technology provider, and changing federal energy priorities. Before that, Walmart, the next-largest county employer, closed the local superstore.
To be fair to Navarro, his callous-sounding “rounding error” comment was not in reference to any particular group of people, but rather to the possibility that President Trump’s on-again, off-again version of trade war could cause a recession and a real decline in GDP growth for the United States and China. At this point, he’s right: A recession is not likely to emerge … yet. But government policies can still do great human harm even while the larger economy sails along on its merry way.
Right now, the U.S. economy is flying along with 4.2 percent real GDP growth. But Winnsboro is suffering a depression. Unfortunately, the effects of the trade war struggle are just beginning to sink in. After a while, there will be more real people caught up in the rounding error.
Their plight will no doubt be of genuine concern to White House advisers and allies who pledge support for the forgotten men and women of our economy. Hopefully that concern translates into a better result.
[Opinion: Trump’s biggest accomplishments are being undermined by a Democrat in the White House: Peter Navarro]
Bruce Yandle is a contributor to the Washington Examiner’s Beltway Confidential blog. He is a distinguished adjunct fellow with the Mercatus Center at George Mason University and dean emeritus of the Clemson University College of Business & Behavioral Science. He developed the “Bootleggers and Baptists” political model.
