Bloomberg is reporting this week that the “consensus view” is that since his arrival on the global political scene in 2016 President Donald Trump has rewritten the politics of trade and ended a 70-year march of perpetual trade liberalization and the acceleration of globalization that came with it.
The report then asks readers to set aside the economics and what administration trade policies have – or have not – actually achieved in dollars-and-cents substance. Bloomberg's experts see the administrations greatest achievement concerning trade is the shift away from Republican free-trade orthodoxy – towards a nationalist protectionism illuminated by what it took to garner working-class votes in forlorn industrial swing states.
Bloomberg then suggests that many expect that the political shift means “that Democrats and Republicans alike will heretofore embrace the same trade objectives forever more.”
However, Bloomberg seems not to be persuaded and it questions whether that is really how the administration rewrote the politics of trade.
The report moves to present a “contrarian view” that calls the past four years a “very loud civics lesson in the misguided economics of protectionism and the costs of tariffs and economic nationalism.” The analysis suggests that in this election administration trade policies have actually been a vulnerability rather than a strength.
For example, Bloomberg thinks Americans' view of trade is more optimistic than ever and has only become more so under this administration. In February 2016 when Gallup asked Americans whether they saw foreign trade as more of a threat or opportunity, the optimistic view won 58-33.
By February of this year, those seeing trade as opportunity had grown to 79% of those polled. That's just one poll, the report says, but reminds that “Gallup has been asking the same question annually since 1992 and this year's result is the highest on record.”
Bloomberg also thinks that critics of the administration see the ongoing trade wars as a political vulnerability in swing states. When author Don Winslow teamed up with Bruce Springsteen on an ad targeting voters in the battleground state of Pennsylvania this year, he took direct aim at the administration's trade war with China and his steel tariffs – and notes that by election eve that ad had been viewed 8.8 million times and retweeted almost 100,000 times.
Overall, Bloomberg notes that tariffs aren't well-liked. The president famously called himself “Tariff Man,” and import taxes are the ideological spine of his trade policy. But polls show they actually haven't been that popular, and polls show more Americans believe tariffs hurt the U.S. economy than help it.
The report point out that even though the administration claims its tariffs saved U.S. steel companies, with “production still slumping and jobs near an all-time low, the iconic U.S. industry is seeking a longer-term solution.”
Overall, Bloomberg thinks that considering the range of issues from the taxing of U.S. corporations to the independence of the Federal Reserve, President trump and former Vice President Joe Biden offer voters vastly different economic policy agendas.
For example, it says that a Democratic victory would likely mean rapid delivery of substantial additional support from stimulus programs — and that Republicans under George W. Bush from 2001-2006 and again from 2017-2018 – instituted sizeable tax cuts. Under unified Democratic control in 2009-2010, spending remained high in the wake of 2009 stimulus legislation.
The expansive $3.5 trillion Heroes Act House Democrats proposed in May illustrates the sort of top-line proposal that could yet become law after the election. A big-ticket package also became law just after President Obama's inauguration in early 2009, passed by a Democratic Congress under a similar backdrop of high unemployment.
A Donald Trump win coupled with a divided Congress could prompt a moderation in fiscal hawkishness from Senate Republicans. A $1.5 trillion fiscal package would push 2021 GDP growth up to 4.3%.
One area where the president has a lot of discretion is on how to shape the relationship with China. Bloomberg examines U.S.-China policy in terms of strategy – where administrations operate on a spectrum from engagement to containment – and tactics, which can be narrow and procedural or wide and unpredictable. On strategy, President Barack Obama favored engagement. On tactics, the approach was procedurally predictable and focused on a narrow set of instruments.
Relations during President Trump's first term started bad and looks set to end worse, Bloomberg says. Engagement is out, containment in. The range of policy instruments is wide and their use unpredictable. If the administration wins a second term, Bloomberg expects more of the same. If the Democrats win, Bloomberg thinks, U.S. – China policies would soften but not fundamentally alter America's new focus on the risks in China's rise.
So, we will see. No one is really sure what lies ahead – but the current concerns are intense and producers, like most others, should watch carefully as these fights play out, Washington Insider believes.