The last week has had any number of interesting developments regarding trade issues between the United States and China, as well as its various allies. There has also been much consternation about the activities at the southern border regarding the separation of children from their families.
The images of children in cages, crying for their parents, parents begging to have their children returned to them when they are being deported, physicians viewing the scene and assessing it with words like “America is better than this”, are offset by Mr. Trump saying for several weeks that this is a negotiating tactic or tool and required by the law. Mr. Trump insisted this was caused by the Democrats and only they could fix it, implying he was powerless to cease these actions, ignoring the fact that his administration instituted them. Then of course, he issued an Executive Order on June 20, 2018 “ending” the program. On June 23, 2018, he raised the specter of simply sending the illegal immigrants back to Mexico which for most is not their home country, without due process. It may be that deporting the illegal immigrants without due process may well be a better and more humanitarian approach than separating families in a system ill equipped to handle the situation. At least give these people the opportunity to make that choice.
One of the more interesting comments by the Trump administration came from Mr. Navarro who is a trade advisor in which he said that there is a special place in hell for Prime Minister Trudeau. I wonder if that special place is reserved just for Prime Minister Trudeau, or will he, be looking down on others in the Trump administration?
The most impressive opposition has come from former first ladies, Mrs. Bush, Mrs. Obama and Senator Clinton with a mixed message from Mrs. Trump. Republicans in the Senate are looking to take action to stem this tide of bad publicity as we drift into the mid-term elections, but were unable to agree on how to proceed and totally unsure of how the President or the House will respond to any such legislation. This of course became moot with the Executive Order. Well maybe, if you ignore the chaos at DHS (Customs and Border Patrol) as to the process to be employed.
Trade is another self-inflicted wound for Mr. Trump. It is clear that NAFTA negotiations linger on, but with no significant movement due to the imposition of tariffs against Mexican and Canadian aluminum and steel. Canada intends to impose tariffs on July 1st on a wide range of goods. Mr. Trump threatens more retaliation if Canada dares to protect its interests. Mr. Trump as always, provides some color by accusing Canadians of smuggling shoes by buying and wearing them back to avoid massive tariffs. He fails to understand that the tariffs are imposed on Canadians returning home because the goods are made in Asia, not because they are made in the USA.
China, on the other hand, is moving into the big dollar range. The U.S. imposed $50 billion of tariffs upon Chinese goods, followed by $48 billion imposed by China, and now Mr. Trump threatens another $200 billion, China has stated it will respond with something closely approximate, which then means we will have half a trillion dollars in goods between the two countries subject to these tariffs. I suspect that at some point Mr. Trump will announce that this is also a negotiating tactic. There is general census that the tariffs will NOT positively effect jobs in the United States. As we venture into the range of $250 billion in tariffs being imposed by China on US goods which apparently will largely focus on farm goods, particularly in goods from the mid-west and far west will likely see a significant drop in exports to China. Where are those exports going to go? Farmers have been warning that these trade activities are likely to significantly hurt them, which raises a question as to how they will react in the mid-term elections. In truth, since many of those farm communities are in deep red territory, the outcome in the House and Senate will not be significantly impacted. If real damage is done to the AG economy, then that could be reflected in votes in 2020.
Mr. Trump with his trade activities runs the risk of seeing a strong economy begin to weaken, and if the economy reverses with the stock market sliding, unemployment increasing, GDP stagnating and/or declining or further stagnation of wages, then this could portend not a self-inflicted wound, but a self-inflicted disaster.
Mr. Trump, although a long time trade nationalist, brings virtually no economic intellectual capacity to the process. He has surrounded himself with people who are of the same mind, and who appear to have the same limitations intellectually.
Mr. Trump is on a path to placing the United States on the same level as his friends in Russia, North Korea and China in terms of violating the human rights of those dangerous two year olds, and producing economic chaos, out of economic order.
Mr. Owens is a former member of Congress representing the New York 21st, a partner in Stafford Owens in Plattsburgh, NY and a Senior Advisor to Dentons to Washington, DC.
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