Wall Street should take Trump more literally.
Many people are in the habit of not taking Donald Trump literally, and that appears to include investors on Wall Street who have responded to Trump’s election with the sort of stock price boom you would have expected from the election of a completely orthodox free marketer like Jeb Bush or Marco Rubio.
Trump has said, many times, that he favors a drastic revision of American trade policy aimed at making it much more difficult for companies to manufacture products in foreign markets (especially China) and then sell them to American consumers. This would, if he pulled it off, be a huge deal for the American economy — dramatically boosting the fortunes of some companies, but potentially crippling others, raising prices of many goods and inviting retaliatory measures that would harm American exports.
As much as Wall Street appears to believe this is just talk, Trump is putting his words quietly into action. Appointments to a range of lower-profile executive branch positions strongly suggest that he is likely to pursue a fairly aggressive policy of trade protectionism.
He even appears to be thinking seriously about how to structure the policymaking process. In the context of a Republican Party that remains mostly invested in a pro-business approach to trade policy, this is exactly what Trump would need to do to unleash a protectionist agenda. Trade wars, in short, are almost certainly coming soon — though the actual consequences are difficult to project.
Donald Trump’s team of protectionists
The Trump transition team returned from its winter holidays to announce that Robert Lighthizer would serve as his United States trade representative. Lighthizer is a true pillar of the DC Republican establishment, having served in the Reagan administration and then as treasurer of Bob Dole’s failed 1996 presidential campaign before settling in as an attorney at the DC office of the white shoe law firm Skadden, Arps, Slate, Meagher & Flom.
He’s an experienced and well-qualified USTR. He was a deputy in the USTR office under Reagan, and his legal specialty is specifically in international trade cases. Lighthizer’s generally a low-profile public figure. To the extent that he’s a thinker at all, it’s specifically as a kind of early harbinger of Trump’s infusion of protectionism into the conservative ideological firmament.
Back in 2008, for example, he penned an op-ed for the New York Times making the case that John McCain should abandon his commitment to free trade. Lighthizer argued that “conservative statesmen from Alexander Hamilton to Ronald Reagan sometimes supported protectionism” and “always understood that trade policy was merely a tool for building a strong and independent country with a prosperous middle class.”
Meanwhile, Trump has also installed his longtime friend and business associate Wilbur Ross at the Commerce Department. Ross is a much more Trumpian figure than Lighthizer, with strong personal ties to the president-elect (he worked on some of Trump’s bankruptcies) and no government experience, but a shared commitment to a GOP brand of protectionism — in Ross’s case deriving from the small fortune he made investing in distressed American steel producers who were temporarily rescued from ruin by Bush-era protective tariffs.
Last but by no means least, Trump has tapped Peter Navarro for a new job running something called the National Trade and Industrial Council. Navarro is basically an anti-trade ideologue, who, despite being a well-qualified economist, holds a view on trade policy that essentially no one in economics agrees with.
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http://www.vox.com/policy-and-politics/2017/1/4/14153514/trump-trade-war
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