US Republican presidential candidate Donald Trump said Tuesday that if elected, he would withdraw the United States from the Trans-Pacific Partnership trade liberalisation initiative and label China a “currency manipulator”.
And in just a matter of minutes, Trump set fire to 30 years of Republican orthodoxy on trade.
In his strongest campaign trade comments to date, Trump made a clear break with his party, which for decades has stood behind the business interests that supported a freer flow of goods and services across borders.
He ripped a pending agreement with Pacific Rim trading partners and vowed to renegotiate the long-standing accord the US has had with Mexico and Canada.
“The TPP would be the death blow for American manufacturing…It would further open our markets to aggressive currency cheaters,” Trump said in a speech in Pennsylvania, while speculating that China “will enter the TPP through the back door at a later date.”
Trump said the US-led pact involving 12 Pacific Rim countries such as Japan, Australia and Vietnam “would also force American workers to compete directly against workers from Vietnam, one of the lowest wage countries on Earth.”
“There is no ways to ‘fix’ the TPP. We need bilateral trade deals,” he said. “I am going to withdraw the United States from the Trans-Pacific Partnership, which has not yet been ratified.”
The businessman also accused presumptive Democratic nominee Hillary Clinton of standing “by idly while China cheated on its currency, added another trillion dollars to our trade deficits and stole hundreds of billions of dollars in our intellectual property.”
Trump said that if he were elected president, he would “instruct my Treasury secretary to label China a currency manipulator,” and bring trade cases against China, both in the United States and the World Trade Organisation.
“Globalisation has made the financial elite who donate to politicians very wealthy,” the presumptive Republican nominee said in a speech at a factory in Monessen, Pennsylvania. Free trade, he continued, was deliberate policy to promote development outside the US.
To economists, Trump is describing what has become known as the “elephant graph”, work by Branko Milanovic of the University of Maryland School of Public Policy. The chart shows how the entire world has fared under 20 years of globalisation, broken down by income. The lives of the world’s poorest have not improved much. The middle class of emerging countries has been lifted through exports. But the lives of middle classes in developed economies have not improved much, either. Even worse, they’re looking up at the world’s richest, who have done quite well.
Emboldened by the Brexit backers’ win last week voting the UK out of the European Union, Trump struck a populist tone in appealing to voters who feel left behind by the US’s integration into the world economy. Similar sentiment drove a majority of voters in the UK to approve last week’s referendum to leave the 28-nation EU.
Trade, said Trump, “has left millions of our workers with nothing but poverty and heartache.”
Armed with data since China entered the World Trade Organisation, economists David Autor, David Dorn and Gordon Hanson have been able to show in several papers that, even as trade creates economic growth overall, it leaves pockets of devastation – towns like Providence, Rhode Island, that used to make the things that China now makes.
The remarks represent a shift in Trump’s thinking. Three years ago, he touted the benefits of an open global economy.
“We will have to leave borders behind and go for global unity when it comes to financial stability,” Trump said in a 2013 opinion piece published by CNN. “The future of Europe, as well as the United States, depends on a cohesive global economy. All of us must work toward, together toward, that very significant common goal.”