Trump And Trade: A Plus For Workers?

Trump's Trade Policy May Work, But Not For American Workers
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President-elect Donald Trump addresses a 'Thank You Tour 2016' rally on December 17, 2016 in Mobile, Alabama.
President-elect Donald Trump addresses a 'Thank You Tour 2016' rally on December 17, 2016 in Mobile, Alabama.
JIM WATSON via Getty Images

On a good day, Donald Trump can fool some people into thinking that he will be a change for the better on trade policy, and by extension on American jobs. He’s for keeping more jobs in the US, renegotiating NAFTA, and taking a tougher line with China.

He did a cute publicity stunt, strong-arming Greg Hayes, the CEO of Carrier’s parent corporation into keeping several hundred jobs in Indiana (lubricated by tax breaks).

Progressives were on the verge of killing the misconceived Trans-Pacific Partnership, when Donald Trump administered the coup de grace—and took the credit.

Trade deals like TPP, and NAFTA before it, signaled American workers that trade policy was mainly for corporate and financial elites, not for regular people. Despite the repeated claims that these deals would produce expanded benefits for all, the benefits went to the top.

The fact that Bill Clinton, Barack Obama, and Hillary Clinton all promoted NAFTA and TPP (until Hillary awkwardly tried to walk back her support), split the progressive coalition and helped Trump.

Some pro-business economic nationalists, such as Alan Tonelson, have contended that progressives, therefore, ought to be applauding Trump’s trade initiatives.

Should they?

Trump’s top adviser on trade, Dan DiMicco, is former CEO of Nucor Steel, a very successful (and viciously anti-union) mini-mill producer, which has on occasion filed trade complaints against China. It’s not clear whether DiMicco will get a job in the administration, but DiMicco supports U.S. manufacturing and is very familiar with the games that China plays.

Trump’s Commerce Secretary-designate Wilbur Ross is also a longtime critic of the U.S. government’s failure to get tougher with China.

Trump’s people are already reaching out to some progressive activists on trade. It makes sense to listen, even to make suggestions, but then to be very, very skeptical of the results.

If we go back to first principles, what’s wrong with U.S. trade policy?

For one thing, it has promoted a set of global rules that define ordinary forms of financial, labor, health, safety and environmental regulation as violations of free trade.

Secondly, trade policy has promoted deals like NAFTA that not only make it easier to export and outsource jobs, but create extra-legal private tribunals to which corporations and banks can file complaints and not have the decisions subject to court review.

Third, trade policy has failed to challenge the mercantilist practices of other nations that close foreign markets to U.S. exports and leave American producers vulnerable to subsidized imports. That has caused the Midwest to hemorrhage jobs—and again, opened the door to Trump.

In the 1970s and 1980s, U.S. trade policy displayed these odd indulgences because state-led economies like Japan and Korea were good Cold War allies. More recently, American presidents have failed to get tough with China—no ally―in part because China cut a deal with American financiers to give them a piece of the action (thank you, Robert Rubin) and in part because U.S.-based multinationals are quite happy to produce in China’s low-wage, subsidized factories.

In other words, trade policies under both Democratic and Republican presidents have helped American industry and finance sell out American workers. This was the year that somebody called them on it, and workers noticed.

But what will Trump do now, and where, if anywhere, is there common ground with progressives?

“Photo-ops with executives pressured into keeping a few more jobs at home may be smart politics for Trump, but they don’t add up to a trade policy.”

It helps to remember that America’s misguided trade policies are part of a suite of policies that have been bad for workers. The others include financial deregulation, inadequate labor regulation, tax policies that promote outsourcing, insufficient public investment and a war on unions.

Trump’s policies in all of these other areas are likely to make things worse, not better. Just look at who he is appointing to key labor, environmental and regulatory posts.

It also helps to remember that Trump’s administration is turning out to be corporatist. If Trump tries to tell his business allies where to produce at more than token levels, the corporate pushback will be yuge.

Photo-ops with executives pressured into keeping a few more jobs at home may be smart politics for Trump, but they don’t add up to a trade policy.

That said, Trump has decided to ally with Russia and get tougher with China. You could imagine Trump taking a harder line against China’s subsidized exports. The U.S. government has the authority to initiate anti-dumping trade cases, but with America’s kid-gloves policy towards China, that not has been done since the 1980s.

In industry after industry, complaints and the cost of pursuing them have had to come from private parties―unions and companies. If Trump were to change that policy, it would be hard for progressives not to applaud, even while holding their noses.

For instance, New York City just signed a contract to use public money give a Chinese state-owned company, the China Railway Rolling Stock Corporation (CRRC) the contract to build at least 1,025 new subway cars. CRRC has already built about 1,000 subway cars for Boston and Chicago. As part of the New York deal, the Chinese state company gets to acquire a U.S. producer of rail cars. That aspect of the deal required the approval of President Obama, and certification that the deal did not have national security implications, over the objections of a rare bipartisan group of 42 senators.

Deals like this happen all the time. If would not be hard for Trump, as a good New Yorker, to insist that this contract go to an American producer. That would be a nice symbolic demonstration of concern for U.S. industry and jobs, as well as a way of showing up the Democrats.

Trump is a master of the symbolic stunt, and on trade he actually has some advisers who know what they are doing.

Trump may try to keep more jobs at home―but by destroying social standards he assures that they will be low-wage jobs. For decades, progressives have been calling for a new global trade regime that helps raise rather than lower social standards, in labor, the environment, health, and human rights. Whatever else Trump delivers, he will not deliver that.

“Trump may try to keep more jobs at home―but by destroying social standards he assures that they will be low-wage jobs.”

What he might deliver, though, is a form of economic nationalism that helps his corporate allies, while doing little if anything for American workers, with the exception of workers in extractive industries, a relative handful of production workers, and some construction jobs if he gets serious about infrastructure (though he also supports killing the Davis Bacon Act which supports construction wages).

As the outlines of his policies become clearer, there may be occasional points of convergence, such as the mercy-killing of TPP, and the retention of some jobs at Carrier (though it only took Trump a little while to trash the president of the union local), and some get-tough stuff with China.

Here is the real risk. A moderately tougher trade policy could take the spotlight off the net effect on workers. Regulatory relief and lower taxes for industry plus the trashing of unions and labor standards may create more jobs, but with wages and career horizons that are even lower.

As Trump goes through the motions of a pursuing a trade policy that serves the people who voted for him, our job is to be very careful not to be gulled or co-opted, to keep pointing out what a real pro-worker trade policy looks like, and to challenge Trump to support one.

Robert Kuttner is co-editor of The American Prospect and professor at Brandeis University’s Heller School. His latest book is Debtors’ Prison: The Politics of Austerity Versus Possibility.

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