In the current trade dispute, Americans have little choice, for now, other than to support Trump's brinkmanship. If he fails, it's time again for the Trans-Pacific Partnership.
The pain of escalating tariffs is increasing as the United States tries to force China to play fair, accept trade reforms and stop stealing intellectual property.
The showdown cost companies in trade-dependent Washington state more than $100 million this year and contributed to a 28 percent decline in exports, according to Tariffs Hurt the Heartland, a national business coalition including commodities companies.
At a coalition event in Seattle last week, representatives of agriculture, manufacturing, retailing and exporting companies explained how this is leading to higher prices, fewer jobs and long-term damage as overseas customer relationships are severed.
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Congress and the public can try pressuring President Donald Trump to end the tariffs. But they should wait a bit longer to see if the tariffs work. Otherwise the nation will have suffered from the pain of this trade dispute without getting long-term benefits that it’s supposed to produce — it would be all pain and no gain.
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This is complicated for Washington, the most trade dependent state, with 40 percent of jobs dependent on global trade.
Regardless of party, supporting Trump’s approach is difficult because of the clumsy manner in which the tariffs were instigated. They began as a nearsighted, political move to protect steel and aluminum producers from unfair competition, disregarding collateral damage the trade dispute would cause to other industries employing more people. The tariffs’ lack of precision also punished good trading partners as well as bad, triggering a flurry of retaliatory tariffs. The immediate effect is basically a large tax increase on consumers and businesses.
Using tariffs as a hammer to force trade policy changes is especially costly for Washington farmers, manufacturers and exporters, whose goods were made more expensive and harder to sell overseas. For instance Mexico, the largest export market for Washington apples, imposed a 20 percent retaliatory tariff on apples in June.
Yet growers and other Washington companies will benefit if tariffs get China, the primary target in this trade dispute, to address longstanding problems. They include import restrictions, making U.S. products less competitive in its market, and industrial espionage and forced technology transfers that harm U.S. tech companies and jeopardize America’s long-term industrial leadership.
U.S. Rep. Dan Newhouse, a Republican farmer in Sunnyside, acknowledges everyone is hurt by a long-term trade war. But he said constituents are telling him that so far, the fight is worthwhile.
“Short-term pain potentially is necessarily worth the long-term gain we could achieve leveling the playing field,” he said.
What’s unclear is when to ease up, because domestic costs are too high. Outgoing U.S. Rep. Dave Reichert, R-Auburn, said Trump’s strategy gives “China a jolt, but when do you cut it off and say my people are being hurt, too?”
A turning point should come in the next few months.
China is apparently resuming negotiations, ahead of a late November meeting between Trump and China’s President Xi Jinping. The Trump administration may also delay an upcoming tariff increase, from 10 percent to 25 percent on certain products, in January.
Meanwhile Americans and Congress should make it clear to Trump that they are paying a high price for his aggressive trade tactics.
All should now realize that a wiser, less disruptive approach was the Trans-Pacific Partnership. TPP would have created a free-trade bloc to counter China and force higher standards. It was negotiated by President Barack Obama but scuttled by wobbly Democrats and Republicans, helping set the stage for Trump’s nationalism and antagonistic trade policy.
So now there’s little choice other than hoping Trump’s brinkmanship works, and doesn’t last too long. If he fails and China remains unchecked, then it’s time to resurrect TPP.