President Donald Trump came into office with a promise to renegotiate what he termed “bad trade deals.” Well-respected detractors like the Nobel Prize-winning economist Paul Krugman, and others, predicted that the election of Trump would be bad for the economy. So far, Trump has proved them all to be wrong. However, China seems to be a hard nut to crack, and so the president has upped the ante. On Monday September 24, 10% tariffs on Chinese goods went into effect.
Whether or not Trump’s negotiation strategy will work remains to be seen.
We know what the establishment thinks about his trade policies, but what about ordinary people? RealClearPolitics’ poll compilation shows that the majority of Americans approve of Trump’s job on the economy. His foreign policy is not as popular though, and it is unclear whether people think of trade deals as an economic issue or as foreign policy.
You have probably heard reported that the president’s overall approval rating is low. According to Rasmussen, which had among the most accurate polls during the presidential election, Trump currently clocks in at 49%, whereas the RealClearPolitics average of polls has him at 43%.
To put this in perspective, in the last year the number of people who strongly approve of the president has slowly risen from around 25% to 35%. In the same time frame strong disapproval has eroded from near 50% to 43%. Given all the craziness and the constant media war on Trump, you probably didn’t expect that. Minds are slowly changing, and the way the president handles the economy most likely plays an important part.
Behind the Curtains
Unlike many of his other policies, Trump’s tariffs are being resisted by many people on the right. Conservatives and libertarians have long been champions of free trade, and barriers to trade are anathema to that vision. Those who wish to demonize him have an easy job of painting him as an old-time protectionist, a mercantilist who believes in a zero-sum game with winners and losers, but is that accurate?
Here is a more nuanced picture: Trump has repeatedly stated that he prefers no trade barriers at all, but the trade must be fair, which means that the other countries cannot subsidize their goods or create a labyrinth of laws that favor domestic products while having free access to American markets.
And China has unquestionably propped up its economy through massive corporate espionage and piracy of intellectual property. Is it fair to allow them to cheat while America is a good boy and plays by the rules of free trade? Trump says no.
What Obama calls “the liberal world order” was set up after World War II, when America’s economy was steamrolling and most of the world was hopelessly backward. It was a time when “Made in Hong Kong” was synonymous with bad quality. The trade deals were set up generously, in the same spirit as the Marshall Plan in Europe.
Trump recognizes that we live in a different era, and that it is time to update those trade deals that are far too lopsided in favor of other nations. Tariffs are his weapons of negotiation, and do not reflect a fundamental belief in protectionism.
Expect Trump to continue forging new trade deals and the economy to slowly improve as if some heavy burden has been finally lifted off it. If that happens, expect his approval rating to pick up as well.