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​New book discloses trade policy fray in White House

Xinhua Financein CFBOND
2018-09-20 10:00

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A new book recently exposed the discord in the White House on America’s trade policy, disclosing that U.S. President Donald Trump was almost alone in his hate for free trade.

This book, titled Fear: Trump in the White House, was penned by Bob Woodward, the journalist who reported in the 1970s on the Watergate scandal and finished his latest work by drawing on hundreds of hours of interviews with firsthand participants and witnesses to the relevant events.

This book describes at length the disagreement on trade policies between Trump, who is a fierce critic of U.S. trade agreements with other countries, and his senior advisors. In particular, it depicts clashes between Gary Cohn, the top ex-White House economic advisor, and Peter Navarro, who oversees this country’s trade and industrial policy and the newly-founded National Trade Council.

Navarro, deemed in the book as someone who hated free trade as much as Trump, blamed America’s trade deficits on those countries which he claimed had imposed high tariffs, manipulated currencies, stolen intellectual properties, run sweatshops and ruined their own environment.

For example, he believed the North American Free Trade Agreement (NAFTA) had hamstrung America’s manufacturing, allowing Mexico to take American jobs and suppress steel prices. His advice was to impose tariffs on imported steel, to which Trump also agreed.

Cohn, on the other hand, held the opposite view. In his words, “trade deficits were irrelevant and could be a good thing, allowing Americans to buy cheaper goods.” He explained that Americans could thus direct more of their money to other products, services and savings.

This book discloses a clash between these two senior advisors at a meeting in the White House. Cohan said 99.9999 percent of the world’s economists agree with him and Navarro was alone, while the latter responded by calling him “a Wall Street establishment idiot.”

Cohn who once worked in Goldman Sachs was described as one who bases his opinion on research, data and fact. He pointed out to Trump that “80 plus percent of our GDP is in the service sector,” listing a number of examples to demonstrate the rising weight of services in America’s economy. What Navarro said was not backed up by any facts, he claimed.

He believed America’s deficit shrinks only at times like the financial crisis in 2008, even going further to say that “if you want our trade deficit to go down, we can make that happen. Let’s just blow up the economy!”

Another Harvard economist, Lawrence B. Lindsey, who used to advise President George W. Bush, also attempted in vain to convince Trump in this regard.

This economist pointed to the benefits of the global marketplace, advising Trump to view the economy as a whole. He tried to explain that buying cheap imported goods will spare America resources to excel in other fields such as services and high-tech goods. Yet this vision is not shared by Trump, who, in the words of this book, “clung to an outdated view of America --- locomotives, factories with huge smokestacks, and workers busy on assembly lines.”
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