Don't let 'drain the swamp' become 'more of the same' in trade policy
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The Financial Times recently reported that the Trump White House is in turmoil over the future of U.S. trade policy.
It was reported that Peter Navarro, Trump’s leading expert on trade policy in the campaign, and an aggressive enforcer of Ronald Reagan's “free-but-fair” trade policies, has been shunted aside by Gary Cohn, the president’s chief economic advisor and former Goldman Sachs president

Navarro was reported to be assigned a small staff in the Old Executive Office Building, across Pennsylvania Avenue from the White House, while Cohn was reported to have his office in the White House West Wing and considerably more staff.

Navarro has been a vociferous critic of U.S. trade policy for several years. He has challenged China’s blatantly mercantilist trade policy, protectionism and its past currency manipulations and even wrote a book and produced a documentary supporting his assertions, “Death by China.”

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In addition, Navarro has been among the few voices to have challenged Germany for “hiding” under the cover of the EU and the Eurozone as it pursues its own more oblique form of currency manipulation.

 

 

German policy works to maintain a lower-than-market value for its currency by making what bankers call “extend and pretend” loans to poorer, less creditworthy Eurozone countries, like Greece and the other PIGS, to keep them in the Eurozone even though they are largely unable to repay the loans, or at least to repay them on time. Keeping the poorer countries in the Eurozone allows Germany the benefit of a much lower value euro, thereby making German exports more attractive.  Were poorer Eurozone member countries to abandon the currency, the euro would soar and inhibit the market for Germany’s exports.

Notwithstanding palace intrigue press reports that free trade was ascendant in U.S. policy, the communique from last week’s G-20 Summit dropped a long-standing and routine statement in prior communiques that the group rejected protectionism at the insistence of Treasury Secretary Steven Mnuchin.

Most of the other finance ministers at the summit reportedly said that they were inclined to allow Secretary Mnuchin his rejection of protectionism because he had only been on the job for five weeks.  However, some other ministers were quoted as saying they did so with the hope that Mnuchin might “come around” when the G-20 meets again in July.  

The president should clarify the tone of U.S. trade policy and insist that his staff carry it out to ensure U.S. intentions and policies with respect to trade are clear to the world. Reports that Navarro’s influence is on the wane, should deeply trouble the Trump voters.  It would mean that the nationalist “drain the swamp” “free but fair” trade rhetoric of the Trump campaign had become “just more of the same” trade policy in the Trump administration.

Let’s hope the latter is not true. It’s not what Americans voted for.

J.G. Collins is the Managing Director of the Stuyvesant Square Consultancy in New York.  A “Never Trumper” during the 2016 election, he is a long-time critic of the bipartisan U.S. policy of unlimited free trade. He has previously written on U.S. trade policy for Forbes, The Daily Caller, and The American Conservative.


The views expressed by contributors are their own and not the views of The Hill.