(Bloomberg View) — Even by his standards, President-elect Donald Trump's statements on trade have been stunning in their recklessness. His proposals essentially amount to the repudiation of a system that has fostered global stability and lifted hundreds of millions of people out of poverty over the last several decades.
And if he actually intends to execute his radical agenda, there's little to stop him.
In other areas of economic policy, such as budget matters, Congress will make the crucial choices. On trade, the White House has wide discretion. The stakes could hardly be higher.
During the campaign Trump threatened to rip up existing trade pacts, withdraw from the North American Free Trade Agreement, and put punitive tariffs on imports from Mexico and China. He's called the World Trade Organization, which promotes liberal trade and adjudicates disputes, "a disaster," and he has said the U.S. might "pull out." Congratulating Britain on its decision to quit the European Union, he says the U.K. and the U.S. can design a new trade deal — but that it makes no difference to the U.S. whether the EU, "a vehicle for Germany," stays together or falls apart.
QuickTake free trade and its foes
Trump's nominee for commerce secretary, meanwhile, appears to believe in the top-down management of trade: "We should treat ourselves as the world's biggest customer and treat nations that are selling to us as suppliers to us," Wilbur Ross told the Financial Times. The global economy, according to this thinking, is not about myriad firms competing across borders to give consumers everywhere the best products at the lowest cost; it's a zero-sum battle between two monolithic collectives: us and them.
Trump's other trade appointments aren't reassuring. Peter Navarro, named as head of the new National Trade Council, seems opposed to imports on principle. He says they subtract from economic growth, which is nonsense. The nominee for U.S. trade representative, Robert Lighthizer, brings his experience as an advocate for restrictions on imports of cars and steel — restrictions that made U.S. consumers worse off and impeded the ability of U.S. manufacturers to compete.
Congress wouldn't be able to do much to restrain the new team's trade measures, especially in the short term. Laws authorizing existing trade agreements, as well as other statutes delegating authority to the president in times of emergency, grant the president wide powers to take unilateral action such as terminating previous commitments and imposing tariffs, quotas or other restraints. Such moves would surely face a legal challenge, but before the cases were resolved, President Trump could very well kill or cripple Nafta, the WTO and any prospect of orderly market-driven trade arrangements.
