WASHINGTON ― Donald Trump won the presidency partly by promising to stop manufacturing companies from shipping jobs to Mexico.
Trump said he could convince an air-conditioning manufacturer called Carrier to scrap plans to shift some jobs to Mexico, for instance, by threatening a 35 percent tax on Mexican-made products the company tries to sell in the U.S.
“And you know what’s going to happen? They’re not going to move,” Trump said in July.
Carrier and Rexnord Corporation, another firm with plans to shutter a U.S. factory in favor of a Mexican one, haven’t given any signal that they’ll back down now that Trump has been elected. Rexnord declined to comment for this story. Carrier has said it’s trying to “ease the transition” for workers who will be losing their jobs.
Chuck Jones, president of the local chapter of the United Steelworkers union in Indianapolis, Indiana, pointed out that Carrier and Rexnord’s relocation plans are for the middle of next year.
“President Trump’s got plenty of time to put a stop to both of them,” said Jones, who represents workers at both companies. “I’m not hopeful.”
It’s not clear how quickly the Trump administration could move. A problem with taxing the companies’ Mexican imports is that doing so would violate the North American Free Trade Agreement, which eliminated tariffs on products traded between the U.S., Canada and Mexico.
But during the campaign Trump promised to renegotiate NAFTA, which he called a terrible deal. And a document obtained from the Trump transition team by CNN on Tuesday indicates the Trump administration would consider renegotiating NAFTA and even withdrawing from it altogether.
“The Trump administration will reverse decades of conciliatory trade policy,” the document says, according to CNN. “New trade agreements will be negotiated that provide for the interests of US workers and companies first.”
Trump’s trade policy is a huge break from the Republican establishment and it could get considerable support from organized labor. In a letter to Trump, USW president Leo Gerard said the union, which had endorsed Hillary Clinton for president, was ready to work with his administration.
“Workers, their families and their communities have been penalized by proposals designed and implemented by economic elites,” Gerard said in the Nov. 10 letter. “There are tremendous opportunities to revitalize the domestic manufacturing sector that include overhauling the failed trade policies that have devastated industry and workers, and repairing and upgrading our nation’s critical infrastructure systems.”
Trump could withdraw the U.S. from NAFTA simply by giving six months’ notice for the withdrawal, according to a widely-cited analysis by Gary Hufbauer of the Peterson Institute for International Economics. And then, because Congress has delegated so much trade authority to presidents over the years, there would be little lawmakers could do to stop him from hiking tariffs.
“US citizens and firms should not rely on the US courts or Congress to shield them from the consequences of Trump’s threats, should he carry them out,” Hufbauer wrote in his September report.
New tariffs could backfire, however. Another analysis by the Peterson Institute found that Trump’s trade proposals would spark retaliatory tariffs in other counties, “unleashing a trade war that would send the US economy into recession and cost millions of Americans their jobs.”
Some of Trump’s critics have said that as president, he won’t deliver on the promises he made as an outsider candidate. Trump’s transition team, for instance, is well-stocked with Washington lobbyists even though he had promised to “drain the swamp” in the capital. The transition team’s point person on trade, according to a list that circulated last week, is Rolf Lundberg, who formerly worked for the U.S. Chamber of Commerce. The Chamber is Washington’s biggest-spending business lobbying group and it likes free trade and NAFTA very much.
American Bridge, an opposition research hub for Democrats, pointed out that another lobbyist on the transition team, James Carter, works for Emerson Electric, a company that has outsourced some production to Mexico over the years.
American Bridge president Jessica Mackler said in an emailed statement that Trump doesn’t believe his own rhetoric. “He’s only interested in filling his administration with lobbyists and fat cat execs that will make Trump and Wall Street richer at the expense of working families,” Mackler said.
But it’s not unheard of for a Republican president to dabble in protectionism. President George W. Bush imposed tariffs on steel in 2002 in response to a surge of steel imports that lowered prices and roiled the domestic steel industry. Bush lifted the tariffs a year later in response to international pressure.
Dean Baker, an economist with the Center for Economic and Policy Research, a liberal think tank that has done research showing the negative impact trade has had on American workers, called Bush’s steel tariffs helpful.
“They gave the steel industry breathing space that they wouldn’t have had otherwise,” Baker said.