Trump Just Weaponized And Unleashed Trade Deficit

Sandeep Gopalan | Pro Vice-Chancellor and Professor at Deakin University

President Trump has doubled down on the war of words with Justin Trudeau and the EU. Trump’s trade adviser Peter Navaro and director of the National Economic Council Larry Kudlow poured petrol on the flames over the weekend.

Navarro asserted “there is a special place in hell for any leader that engages in bad-faith diplomacy” with Trump, whereas Kudlow claimed that “[Trudeau] really kind of stabbed [the U.S.] in the back.”

European leaders responded in kind; European Council President Donald Tusk tweeted, “There is a special place in heaven for @JustinTrudeau.” Macron appeared to accuse Trump of “incoherence and inconsistency,” stating that cooperation needs more than “fits of anger or little words.” Merkel labeled Trump’s behavior as “depressing.”

Is the tohubohu a sign that old alliances are in tatters? Is the world entering a new trade war? Are these leaders correct to take offense?

Foreign leaders have just been rudely awakened and introduced to a dose of real international democracy. For too long, trade deals and their consequences have been discussed behind a veneer of sophistication. Disagreements are couched in euphemisms and the champagnesipping elites negotiating these agreements have rarely encountered the wrath of those directly affected by their decisions. They deal in technocratic privilege, exchanging concessions largely insulated from the negative consequences of their actions.

Trump just rocked that boat. Trump just weaponized the boring trade deficit and unleashed it on Trudeau, Merkel, and the EU elites. And although they don’t like it, this is democracy in action. Except that it is democracy unbound by national borders.

In other words, political attacks for trade policy decisions no longer stop at the map lines. In a globalized world, Trump seems to be saying that every leader who is a participant in the international order is fair game for attack — even outside their home turf.

First, a quick recap of how Trump rocked the boat. Following the G7 summit, Trudeau told the press that Canadians “will not be pushed around.” For reasons that are not entirely clear, Trump took offense and tweeted:

“Based on Justin’s false statements at his news conference, and the fact that Canada is charging massive Tariffs to our U.S. farmers, workers and companies, I have instructed our U.S. Reps not to endorse the Communique as we look at Tariffs on automobiles flooding the U.S. Market!”

In a second tweet, he accused Trudeau of being “very dishonest & weak” because he “acted so meek and mild” during the summit. The president added that U.S. tariffs “are in response to his of 270 percent on dairy!”

This would have been bad enough but Trump escalated the feud after landing in Singapore for his summit with Kim Jong-Un. He claimed that fair trade would be called “fool trade if it is not reciprocal” and refused to “let our friends, or enemies, take advantage of us on trade anymore. We must put the American worker first!”

The president continued that the $800 billion trade deficit was unfair to Americans, adding, “Why should I, as President of the United States, allow countries to continue to make massive trade surpluses, as they have for decades, while our farmers, workers & taxpayers have such a big and unfair price to pay?”

He then linked the trade issue to his familiar complaints about allies taking advantage of the US:

“The U.S. pays close to the entire cost of NATO – protecting many of these same countries that rip us off on trade (they pay only a fraction of the cost – and laugh!)” he tweeted. “The European Union had a $151 billion surplus – should pay much more for military!”

“Germany pays 1 percent (slowly) of GDP towards NATO, while we pay 4 percent of a much larger GDP. Does anybody believe that makes sense? We protect Europe (which is good) at great financial loss, and then get unfairly clobbered on trade. Change is coming!”

Clearly, these are strong words and it is unsurprising that foreign leaders are alarmed. Trump’s critics have pounced on their reactions to slam him — joining many sections of the media.

It would be a mistake, however, to denounce the message. If we are truly in a global world, why should foreign politicians be insulated from criticism when their actions have local impact?

Moreover, the old informational barriers don’t apply Twitter and other social media which connects people across national boundaries, which enables them to have a shared conversation about global politics. No harm if people use that connection to enable greater democracy in relation to international trade.

Trump’s attacks might be seen as part of the movement to bring democratic accountability to international trade. And international trade certainly needs accountability for its own legitimacy. Part of that legitimacy is for Merkel and Trudeau to explain why it is acceptable for them to impose tariffs and other trade barriers, but not so for America.

In 2017, the trade balance was € 119.6 billion in favor of the Europeans. According to the US Trade Representative, the total trade in goods and services with the EU was worth $1.1 trillion in 2016, and the trade deficit for goods and services was $92 billion in 2016. Why should the American voter and her representative not be concerned by this and demand solutions?

Trump’s America-first agenda might hasten the emergence of a democratic trade order at the global level. If that’s not irony enough, EU elites’ discomfort with democratic accountability must be.

Dr. Sandeep Gopalan is the pro vice-chancellor for academic innovation and a professor of law at Deakin University.


The views and opinions expressed in this commentary are those of the author and do not reflect the official position of The Daily Caller.

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