Trump’s 7-Point Plan To Drive America Into Recession

How “the Donald” Plans to Defy Economic Law

GOP presidential candidate Donald Trump recently revealed his Seven-Point Plan regarding international trade. Doubling down on his protectionist instincts, Trump plans to stop all the “cheaters,” per RealClearPolitics. Considering the global implications of these ideas, it’s worth breaking them down point-by-point.

One: I am going to withdraw the United States from the Trans-Pacific Partnership, which has not yet been ratified.

This idea, although it has some merit on the surface, is no recipe for success. While some of the TPP’s provisions are less than ideal, such as the power multi-national corporations are given in settling international disputes, the TPP is far from settled law yet and still provides many benefits.

There still exist many barriers to U.S. goods entering foreign markets, and the TPP can give the U.S. a huge advantage in that respect. Additionally, this deal very conspicuously excludes China. For someone who has made bashing China a large part of his platform, Trump seems to be deliberating ignoring a pact that let’s us write the rules of trade with China in the background.

Two: I’m going to appoint the toughest and smartest trade negotiators to fight on behalf of American workers.

This is all well and good, but not exactly a specific policy proposal. Any candidate running for office can be expected to say the same thing. This isn’t as much of a plan, as much as it is a value-judgement about the kind of people Trump thinks he’ll appoint. That’s all there really is to it, here.

Three: I’m going to direct the Secretary of Commerce to identify every violation of trade agreements a foreign country is currently using to harm our workers. I will then direct all appropriate agencies to use every tool under American and international law to end these abuses.

As it always is with Trump, specifics yield way to glittering generalities. It’s hard to say what a Trump administration would consider harmful to workers. Given the protectionist tone of his rhetoric, it could very well be that anything that subjects the American worker to competition becomes a target.

The American public benefits when the free flow of goods and services is tolerated through the international market place. The international community benefits when it has access to American markets. With this proposal, Trump is suggesting the end of mutually-advantageous transactions just because a some people don’t have the skills to face the global community.

If Trump were to suggest programs to train the American worker and increase their marketable skills, fine. If he were to suggest programs to help workers displaced by the global economy find private-sector work, that’s fine too. But to pursue any path that limits trade is a recipe for slow growth.

Four: I’m going tell our NAFTA partners that I intend to immediately renegotiate the terms of that agreement to get a better deal for our workers. And I don’t mean just a little bit better, I mean a lot better. If they do not agree to a renegotiation, then I will submit notice under Article 2205 of the NAFTA agreement that America intends to withdraw from the deal.

While Trump certainly loves to bash the North American Free Trade Agreement, he conveniently ignores all the facts that prove him wrong.

Per the Chamber of Commerce, Trump’s favorite target, Mexico, is a big part of the U.S. economy. “U.S. merchandise exports to Mexico (population 128 million) were nearly double those to China (population 1.4 billion), which is the third largest national market for U.S. exports.”

This “policy prescription” just reinforces how Trump either doesn’t understand the benefits of free-trade, or is purposefully manipulating or misinforming his audience for his own personal gain. To withdraw from NAFTA would remove the benefit of nearly 5 million net jobs created by the pact. That’s what’s truly sticks it to American workers.

Five: I am going to instruct my Treasury Secretary to label China a currency manipulator. Any country that devalues their currency in order to take advantage of the United States will be met with sharply.

This is the first of Trump’s last three points that are dedicated to starting a trade war with China. There’s nothing that would be more devastating to the American worker than such an event. China is using the power granted to all sovereign nations with a central bank, namely the ability to manage their currency as they stay fit. Espousing that the U.S. Federal Reserve doesn’t target interest rates to keep our own economy afloat is just ignorant.

To assume that China’s dealings with their currency have some dire effect on the U.S. is also an exaggeration. Per the Wall Street Journal, “movements in the nominal yuan exchange rate have almost no long-term impact on global flows of exports and imports or on broader considerations such as average wages.” To put it simply, Trump’s barking up the wrong tree.

Six: I am going to instruct the U.S. Trade Representative to bring trade cases against China, both in this country and at the WTO. China’s unfair subsidy behavior is prohibited by the terms of its entrance to the WTO, and I intend to enforce those rules.

Once more, this inflammatory behavior is what will drive the U.S. into a trade war at the expense of the American worker. It’s hard to know exactly what The Donald means by “unfair subsidy behavior,” but it can’t be any worse than what the U.S. does on a regular basis.

We throw subsidies at industries ranging from agriculture to energy. While subsidies are no cause for celebration from a free market standpoint, it’s hypocritical at best to call out China for such activity while blatantly ignoring it in America.

Seven: If China does not stop its illegal activities, including its theft of American trade secrets, I will use every lawful presidential power to remedy trade disputes, including the application of tariffs consistent with Section 201 and 301 of the Trade Act of 1974 and Section 232 of the Trade Expansion Act of 1962.

To save you the trouble of dusting off your old statute books, the Trade Act of 1974 essentially deals with the president’s ability to address “unfair trade practices” of other countries and the government’s ability to address grievances of domestic industries claiming injury via import. The Trade Expansion Act of 1962 regards the president’s ability to raise or lower tariffs that he feels could have an impact on national security.

What these things would mean in the context of Trump’s statements and his potential presidency is that Americans should prepare to pay a lot more for all those Chinese goods that saturate our markets. Whenever politicians harp on “unfair trade practices,” it’s usually under the auspices of protectionism. When such policies are applied, the American consumer is often left holding the check, so to speak.

The above should tell you everything you need to know about Trump’s plan for America. If you’re currently enjoying the consumer-friendly prices brought on by the free exchange of goods and services, it’s not for you. If any of his ideas come to pass, America shouldn’t be surprised to see growth below that of the Obama presidency. That’s the real raw deal.