Can Trump Start a Trade War?

From his first moment in office, he can take the world economy on a wild ride.

By Holman W. Jenkins, Jr.

Donald Trump campaigns in Cadillac, Mich., March 4.

Donald Trump campaigns in Cadillac, Mich., March 4. Photo: Jim Young/Reuters
 

Donald Trump is a businessman who gets things done, he keeps telling us. His prowess as a negotiator is central to his pitch for granting him the powers of the presidency to “make America great again.”

 
Not that he actually reminds us of any business great we’ve heard of— Steve Jobs, Bill Gates, Jack Welch or Indra Nooyi, say. Nor does he attract endorsements from any. His latest claim to fame, in fact, was a TV show in which he acted out a lowbrow parody of a business titan.
 
Countless have been the incoming emails suggesting that any doubts voiced about President Trump are but the wailing of a deranged and impotent “establishment.” Countable—in fact, the number is zero—have been those laying out an actual case for a Trump presidency.
 
As the polls keep telling us, Trump voters are Reagan Democrats—that is, not conservatives but people who landed in the Republican Party because they were tired of being looked down on by liberals.
 
President Obama’s most immortal phrase may turn out to be one he didn’t mean us to hear, accusing these voters of clinging to guns and religion. “What’s the matter with Kansas?”
 
Democratic gurus once asked, referring to the alleged blindness of the white working class to their own economic interests. In Donald Trump these voters have found a champion. His lip service to their social values may be perfunctory, but he gives full voice to their distrust of foreigners, minorities and the panoply of protected identity groups that Democrats worship. He also serves up the complete menu of protectionism-plus-welfare for the traditional working class that Democratic Party populists of the “Kansas” school once urged on their own party.
 
Which brings us to an increasingly urgent question. What would President Trump do in office?
 
He may be the narcissist his critics say, but he would arrive in the White House looking for something to do consistent with his promises and his supporters’ expectations, and with his own penchant for action.
 
His wall with Mexico may or may not be an intentionally symbolic figment of his imagination, but is not immediately actionable. Whereas, contrary to what you may have read elsewhere, President Trump would have considerable power to provoke trade wars to create an instant opportunity for his negotiating acumen.
 
As the University of Houston’s Brandon Rottinghaus and Wesleyan’s Elvin Lim point out in a highly relevant 2009 paper, the Constitution may reserve for Congress the power to regulate international trade, but presidents increasingly have claimed “delegated unilateral powers” to issue proclamations under the 1974 Trade Act.
 
That law is aimed at expanding trade and lowering barriers, but presidents have used it to justify trade-restricting actions by invoking unrelated laws instructing the executive to pursue some definition of the national interest.
 
Though such proclamations can be overturned by Congress, they never are. And President Trump would find no shortage of recent statutes—having to do with terrorism, pollution, cybersecurity, consumer safety, labor rights, etc.—that he could plausibly cite as an excuse for unilateral action against trade partners.
 
What’s more, he would invoke an impeccable precedent, none other than Ronald Reagan, who, within weeks of taking office in 1981, imposed sweeping “voluntary” restraints on Japanese cars that amounted to price fixing for Detroit’s benefit.
 
Reagan further “negotiated” unilateral restraints on memory chips, forklifts, motorcycles, color TVs, machine tools, textiles, steel, Canadian lumber and even mushrooms—any one of which, if done today, would likely hit our more interdependent and currently fragile global economy like a bombshell.
 
Reagan never campaigned as a protectionist. He did not argue that America’s problems were caused by other countries. Privately, his team excused his behavior as necessary to defuse protectionist rage in Congress while waiting for tax cuts and deregulation to waken America’s animal spirits during a disastrous recession. And Reagan made sure his “voluntary” restraints were palatable to the Japanese, who, in return for going along, were rewarded with a share of the price-fixing profits at the expense of American consumers.
 
Mr. Trump would be launching his trade war in a very different world, and as a solution to America’s ills, so we can start “winning again.” Since Reagan’s day, the U.S. economy has grown 2.5-fold, but trade has grown eightfold. International capital flows, once a fraction of global GDP, now are a multiple of global GDP. Plus, today’s economies are bogged down with debt. Markets would likely respond to Trump economic war in chaotic ways Reagan didn’t have to worry about (until he did, with the 1987 crash).
 
But here’s the important point: Anybody who believes that a President Trump would land in office bound by checks and balances, unable to do much, is kidding himself. He would have all the powers he needs to take the U.S. and world economy on a wild ride from the moment he sets foot in the Oval Office.

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