While speaking to business leaders at the Davos Economic Forum in January, President Trump declared the United States open for business. “America first does not mean America alone,” Trump insisted. “When the United States grows, so does the world.” But as is usually the case when the president is expressing anything resembling generosity, there was a caveat: “We are also working to reform the international trading system so that it promotes broadly shared prosperity and rewards to those who play by the rules,” he said.
Though there are already plenty of trading “rules” that have been agreed upon by the international community, Trump has proved to not be a huge fan of mutually beneficial agreements, even with allies. To the president, there are winners and there are losers, and if America is going to win, that means other nations need to lose. It’s a philosophy that has governed his business dealings for decades, and now that he’s the leader of the free world, he’s applying it to to trade. The latest sign of Trump’s discontent with America’s trade alliances came Friday morning when Axios reported that he has repeatedly threatened to withdraw the United States from the World Trade Organization, the primary organization undergirding the international economic balance.
Aides have tried to impress upon the president just how vital it is that the United States remain in the WTO, and there are no current plans to leave, but the president appears to be fixated on at least reworking America’s involvement. In response to Axios’ report, Treasury Secretary Steve Mnuchin said that though the president has “concerns” about the WTO, the idea that he wants to pull out of it altogether is an “exaggeration.” Axios doubled down on its reporting in response to Mnuchin’s attempt to diffuse the situation.
1. America designed the WTO
2. America benefits massively from the WTO
Withdrawal cuts off American farmers, workers and companies from 7 billion consumers in countries growing much faster than America can/will
Disinform. Demonize. Destroy. This is LAZY policy. And so, so scary https://t.co/T9Evu31mHT
— Chad P. Bown (@ChadBown) June 29, 2018
Trump’s frustration with the WTO is nothing new. In July 2016, he threatened to pull America out of it during an interview with NBC’s Chuck Todd. “We’re going to renegotiate or we’re going to pull out,” he said. “These trade deals are a disaster, Chuck. World Trade Organization is a disaster.” Republican leaders immediately moved to defend the WTO, with House Speaker Paul Ryan telling Politico in a statement that he “believes the WTO plays an important role of ensuring other countries meet their obligations and don’t violate agreed upon rules.”
Complaining about NAFTA was another hallmark of Trump’s campaign that has persisted into his second year in office. Canada, Mexico and the United States have attempted to renegotiate the quarter-century-old alliance, but talks stalled after the United States demanded a sunset clause that would have required all three nations to opt back in after five years. Trump’s true desire seems to be to negotiate bilaterally with Mexico and Canada, which would effectively render NAFTA obsolete. He said as much in October. “It’s possible we won’t be able to reach a deal with one or the other, but in the meantime we’ll make a deal with one,” he told reporters with Canadian Prime Minister Justin Trudeau at his side.
With the exception of the Trans Pacific Partnership, which Trump pulled the United States out of less than a week after he took office, America’s trade alliances remain intact, for now. That doesn’t mean the president hasn’t done plenty of damage to America’s trading relationships with its closest allies, and, in the process, American workers. Late last month, Trump imposed a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports from Canada, Mexico and the European Union, effectively starting a trade war. The move was maligned by lawmakers, economists and America’s allies, who promptly imposed retaliatory tariffs, the effects of which are now being felt in industries across America, from pig farming to auto manufacturing.
The most prominent company to feel the pain is Harley-Davidson, which on Monday announced that it is planning to shift some of its production – and, presumably, jobs – overseas in response to a retaliatory tariff placed on motorcycles sent to Europe. The decision has rankled and embarrassed the president, who last year praised Harley specifically for “building things in America.” As a result, he’s spent most of the week criticizing the company in a variety of forums. “Don’t get cute with us. Don’t get cute. They don’t realize the tax is coming way down,” Trump warned Harley at the Thursday groundbreaking for a new Foxconn plant in Wisconsin that will cost taxpayers $370,000 per every job it creates. “Build them in the USA,” Trump continued. “Your customers won’t be happy if you don’t.”
Harley-Davidson should stay 100% in America, with the people that got you your success. I’ve done so much for you, and then this. Other companies are coming back where they belong! We won’t forget, and neither will your customers or your now very HAPPY competitors!
— Donald J. Trump (@realDonaldTrump) June 27, 2018
Harley-Davidson and other companies – like Missouri’s Mid Continent Nail Corporation, which may lay off all 500 of its workers as a result of new steel tariffs imposed by Mexico – could be bellwethers for what’s to come as retaliatory tariffs continue to take effect. A recent report by Trade Partnerships Worldwide estimates that the steel and aluminum tariffs will result in a net loss of over 400,000 American jobs over the next three years. Things will only get worse if Trump moves to remove the United States from its trade alliances. When the steel and aluminum tariffs were imposed a month ago, U.S. Chamber of Commerce chief executive Tom Donohue wrote a letter to his board of directors estimating that as many as 2.6 million jobs could be lost if Trump decides to axe NAFTA. If he were to pull out of the WTO as well, the impact would be beyond catastrophic. Trump said at Davos that when the United States grows, so too does the world. What he doesn’t seem to understand is that when the global economy prospers, so too does the United States.