Trump is Right: G7 Needs a Wake-Up Call on Trade

By | 2018-06-11T23:28:20+00:00 June 12th, 2018|
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The recent meeting of the G7 leaders in La Malbaie, Quebec ended dramatically, with Canadian Prime Minister Justin Trudeau harshly criticizing U.S. tariffs on steel and aluminum and threatening to retaliate. President Trump then instructed U.S. negotiators not to sign the communique that group members issued at the conclusion of the summit.

Predictably, global elitists have reacted with the usual horror, and expressed their customary disdain for Trump. According to the New York Times, we are witnessing a “slow-rolling collapse” of our “fragile alliances.” Trump is frivolously up-ending the global order, we are told, and alienating countries that traditionally have been our closest friends and partners. The talking heads may have backed off on their threats of apocalyptic “trade wars” (perhaps because strong economic growth rates and the ongoing buoyancy of the stock market make their predictions of doom seem laughable), but they are still clutching at the idea that we are witnessing a “fundamental” shift in the prestige and influence of the United States, and a steady worsening of our relationships with almost all civilized countries. There is even talk that the G7 has become the “G6+1” as America goes it alone.

The problem is these arguments are entirely self-serving, insofar as the global elite always chafes at the effrontery of populists like President Trump, and it invariably seeks to defend its own privileges and prerogatives by labeling all criticism of the established international economic order “protectionist” or “isolationist.” In fact, seldom do the elitists even bother to address the substantive complaints made by Trump (and others like him) about the unfairness of existing trade dealsthey simply wag their collective finger at anyone boorish enough to question the present regime of “free trade.”

Trading relationships should be susceptible to criticism and revision, however, and when the people of a sovereign state vote to empower a new leader who embodies such criticism and reformist zeal, his election should have consequences. The elite talks as if the vicissitudes of something as shabby as democracy should be divorced from our sacred trade agreements. Nonsense!

Turns out, G7 members are targeting their retaliatory tariffs against U.S. industries and enterprises concentrated in states that voted for Donald Trump. In other words, they seek to manipulate democracy itself and foster political headaches for those who dare to question the world order. So much for Russians trying to influence our elections. In reality, we have more to worry about from the French and the Canadians! This is simply outrageous, and it ought to raise the hackles of any American patriot.

Doing a Service
The idea that President Trump is doing permanent damage to our relations with our traditional allies flies in the face of the mountain of evidence that Trump has formed productive, respectful working relationships with numerous world leaders, from President Emmanuel Macron of France to Prime Minister Shinzo Abe of Japan. Moreover, we should keep in mind that our ties with other powerful, wealthy nations are always troubled by tensions and disagreements, and, in the post-World War II era as a whole, many of these differences of opinion have been far more serious and dangerous than the current spat over trade barriers. Lest we forget, Messrs. Trump and Trudeau are duking it out largely over the price of milk. It seems unlikely that U.S.-Canada relations will be scarred permanently by so trivial a dispute.

Lastly, the critique of Trump’s performance at the G7 summit is misplaced because Trump is actually doing both the American people and the citizens of all the G7 nations a great service: he is drawing attention to the deficiencies of past trade agreements—deficiencies that have in many cases cost jobs, shuttered factories, and abetted many a populist backlash against elitist economic manipulation. Trump does so not because he wishes to curtail trade, but in order to build it on a sounder basis. Trump has made it abundantly clear that he supports free trade, but not biased trade deals that require openness on the part of some and allow tariff and non-tariff barriers for others.

How About Real Free Trade?
The truth is that the leaders of the international economic order have long lived a lie: they pantomime unfailing devotion to “free trade,” while at the same time overtly and covertly carving out exceptions for their preferred industries. The result is a half-hearted form of free trade that rewards sly negotiation and punishes naïve idealism. As Trump suggests, all too often it is the United States that has been the most naïve, accepting a trading regime that imposes massive trade deficits and costs millions of jobs.

In 2014, the United States had a $142 billion trade deficit with the countries of the European Union, and a $35 billion deficit with Canada. Essentially no one believes that this is because American companies can’t compete with their overseas rivals—it is instead manipulative, predatory trade practices that explain the imbalance. Why, then, should the United States not try to re-balance this equation in its own interests?

More broadly, though, will it not benefit all the nations concerned if we find a new formula for trade that limits job losses and de-industrialization, and that finds favor with voters anxious about their economic futures?

To achieve such a trading rapprochement, the United States even should be willing to make concessions of its own. After all, we too are sometimes guilty of using subsidies and non-tariff barriers to insulate our industries from foreign competition. If G7 countries believe their own rhetoric about free trade, surely they will be willing to meet us halfway and cooperate in the elimination of surviving trade barriers . . . unless, that is, they prefer to thumb their noses at Donald Trump on principle. Some principle, though!

The Choice Before the Globalists
In the end, for seeking the amelioration of a broken trading system, Trump should not be seen as an enemy of the established order, but rather as its would-be savior. His suggestion to his fellow leaders in Quebec that ideally he would like to see the elimination of all tariffs throughout the G7 economies is a testament to his dedication to the principle of free trade, and his belief in the transformative power of capitalist competition and development. The fact that Trump is clear-eyed about the pressing need for reform in our trading relationships makes him a realist, yes, but not the protectionist boogeyman that the mainstream media, and its international fellow-travelers, portray.

The truth is that the global economic elite faces a choice: take Trump (and the tens of millions of voters he represents) seriously, and repair and refit the damaged infrastructure of “free trade,” or mock and ignore him, ensuring that the wave of economic resentment and protectionist sentiment that seemingly has been cresting for years now will build into a true tsunami.

In that case, the global bigwigs may someday look back and say, “Donald Trump? He was the least of our problems.”

Photo credit: China News Service/VCG via Getty Images

About the Author:

Nicholas L. Waddy
Nicholas L. Waddy, an associate professor of history at SUNY Alfred, blogs at www.waddyisright.com.