Donald Trump's 'America First' Mantra Is Dangerous Code for America Alone

Donald Trump's 'America First' Mantra Is Dangerous Code for America Alone
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Even as President Trump used the latest Gary Cohn-inspired mantra to try to make his protectionist trade policies more acceptable to the Davos crowd, it was becoming more and more apparent that “America First” does indeed mean “America Alone.”

While 35 new bilateral and regional trade pacts are being considered around the world, the United States is a party to just one of them, a negotiation with the European Union that has gone dormant. Even as Trump was heading to Davos, the TPP-11 – all of the countries that were party to the Trans-Pacific Partnership other than the United States – announced it would enter into an historic trade pact while the U.S. stood on the sidelines.

In many ways, despite a rise of nationalism in Europe as well as in the United States, we are witnessing a renaissance of free trade.  The EU and Japan have launched a new trade agreement, China is pursuing a multilateral trade deal with fellow Asian countries, and the EU and Mexico are updating their own bilateral agreement. But while other countries increase their trade and investment links, the United States seems to be out on its own.

Trump made his antipathy to free trade clear during the election campaign, and provided a pungent example that he meant it when he pulled out of the TPP just days after being sworn in. One can only assume that the Administration thought if they refused to participate, the rest of the world would be struck by trade paralysis.

If that is what they were thinking, they could not have been more wrong. Under its new name, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership would be the largest trade agreement in history, even without the United States. It would account for roughly one-sixth of world trade, and include major U.S. trading partners like Japan, Canada and Mexico. The fact that the United States finds itself left out of the cross-Pacific pact is especially ironic given that many its original provisions negotiated by the Obama administration had been demanded by the American business community and played on areas of U.S. competitive strength – including courier deliveries, biologics, telecommunications and medical devices – as well as new measures to protect investments

The world’s governments are marching forward on free trade. But the United States is watching the parade pass it by.

Last week provided concrete examples of the new protectionist outlook in Washington – and its impact across the country. President Trump slapped heavy tariffs on imports of solar panels and washing machines, an attempt to help U.S. manufacturers of those products that will actually cause far more damage to related industries, which will see the price of crucial inputs rise dramatically. The Solar Energy Industries Association estimates roughly 23,000 U.S. solar jobs, especially among panel installers, will be lost because of the tax on solar imports. It is unlikely that customers will switch in large numbers to American producers because there isn’t enough capacity in the U.S. to meet strong demand. In fact, less than 20 percent of U.S. solar demand is met by domestic manufacturers.

The 30 percent tax on imported large washing machines will prod American producers to boost prices by almost the amount of the new tariff – a cost not only to end-use consumers but also to real estate developers. The tariff will also drive up costs for consumers who need a washer repaired since imported parts are also covered by the ruling.

America First does not just harken back to a dark time characterized by American isolationism and appeasement on the eve of World War II. It reverses the progress that has been made on the trade front since the war. Rather than opening the U.S. market, the Trump administration seems to think that the way to create wealth is by restricting it. Rather than freeing trade, they are trying to manage it, setting up a toll-booth to rest tribute from all who would enter.

The problem is a lack of understanding of the value of free trade. The real value is not simply reflected by trade surpluses. If it were, the 1970s would have been a golden economic age for the United States, and the 1980s and 1990s would have been times of economic darkness. The value of free trade isn’t that it restricts competition, but that it encourages it. It forces domestic companies to compete, widens the division of labor, allows businesses and individuals to pursue areas of comparative advantage, and encourages the dissemination of knowledge and technologies. A trade agreement grows the economy by eliminating trade barriers, not by adding to them or trying to manipulate them

In his Davos remarks, Trump emphasized that the United States is open for business.  But if foreign direct investment and trade partnerships are put at risk by a mercantilist approach, how open will business be to the United States?

Allan Golombek is a Senior Director at the White House Writers Group. 

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