No one would mistake President Trump for a details guy. And his constant obfuscations make it easy to dismiss the sentiment that underpins his rhetoric, particularly when he’s live-tweeting commentary on his growing trade dispute with China.
When Trump misstates the bilateral trade deficit, for instance, that’s a number easily referenced — and he can be easily proven wrong. It doesn’t exactly inspire confidence that he has a grasp of the issues.
Yet buried in his hyperbolic avalanches is the reality that a trade reset with China is necessary and overdue. And this is causing serious fissures in the Republican party.
Case in point: The developing feud between the president and the libertarian Koch network. In 2018, they’re the party’s money men, and every bit the free-trade ideologues of whom Trump is a skeptic. His protectionist inclinations have the Kochs even threatening to bankroll trade-friendly Democrats in future elections.
It’s their money to spend, of course. But if they think voters are going to follow them on this, they’re misreading the electorate and the mandate Trump brought with him to the White House.
How do they think he won the election, anyway? He did it largely by promising trade reform. The polling bears this out. In 2016, there was a deep anger among voters in the industrial Midwest — precisely the swing states a presidential candidate needs in his electoral column — regarding the status quo on American trade policy.
Trump harnessed that anger, but he didn’t invent it. It was breeding well before he arrived. These were the regions that bore the brunt of the import shocks after China gained a normalized, predictable U.S. tariff schedule in 2000.
For consumers nationwide, it was a short-term boon in the form of marginally cheaper goods on the shelves at big box stores. But for manufacturing communities in places like Ohio, Michigan, and Wisconsin, it meant steady civic decline. It meant a significant chunk of the working-age population removed from reliable factory jobs and introduced to constant job churn. It meant lower annual earnings and higher divorce, drug use, and suicide rates.
Many of the voters in these places cast ballots for Barack Obama in 2012. When they broke for Trump four years later, they carried their states with them.
This anger hasn’t evaporated, and it wasn’t misplaced. While the overwhelming majority of the economics profession disapproves of the way the president has prosecuted his trade dispute with the Chinese government, it would also agree that instead of opening up to free trade after joining the World Trade Organization in 2001, China used its new wealth to double down on mercantilism.
China kept a currency peg to maintain an artificial trade advantage for years. It built market-roiling overcapacity in industries like steel and aluminum that caused layoffs in countries around the world. It continues to force technology transfer rules on foreign firms in exchange for market access, and it still encourages intellectual property theft when it can’t buy what it wants. And, for what it’s worth, it doesn’t take an economics degree to recognize China has simultaneously used this wealth to build the world’s largest police state.
Back in the United States and under the Republican tent, the Koch network has recently won a slew of policy victories. This administration has delivered on corporate and individual marginal tax rate cuts and drastic industrial deregulation. There’s an opportunity to install a truly conservative Supreme Court that could sit for years, and Trump’s Cabinet is stacked with familiar faces. Before this fight with the White House, the Kochs even publicly bragged about its victories as their own.
But Trump’s divergence from establishment Republican trade orthodoxy is apparently a bridge too far, hence their threat to withhold money from Republican candidates and officeholders who support him.
The president will continue to play it fast and loose with the facts while pursuing an aggressive trade policy with China. Those who bankroll Republican candidates will continue to steam, and they might even follow through on their warnings that they’ll send their political donations elsewhere.
I think they will find that to be a mistake, but it’s theirs to make.
As for the Democrats considering Koch network money in exchange for fealty to the status quo: They would be wiser to stand with the workers who voted for trade reform in 2016. That sentiment isn’t going to dissipate in the coming elections.
Scott Paul is president of the Alliance for American Manufacturing.
