Donald Trump and Elizabeth Warren Are Both Stuck In the Past
President Trump and Elizabeth Warren share the same backward looking trade policy for a simple reason - they both share a U.S-centric view of the world. They both imagine that the U.S market carries the same sway over the rest of the world that it did toward the end of World War II.
Both Warren and Trump share the hubristic belief in the centrality of the U.S market to the world economy. It is why Trump anticipated that a trade war with China would be “good and easy to win.”
Nothing could be further from the truth. At end of the war, U.S GDP represented over 40 percent of global GDP. Now it doesn’t even command 25 percent.
But don’t try telling that to Sen. Warren. She stated at Thursday’s Democratic Party presidential debate that “everybody wants access to the U.S market.” Everybody except those who see China, and Asia in general, as a better place to be than the United States for reasons of demographics.
By the year 2030, the U.S market will represent just 7 percent of world sales - less than a third as much as China. Given these kind of growth numbers, it is not surprising that corporate CEOs salivate at the idea of expanding their footprint in China. Ford can already expect to sell more cars in China than in the United States. Last year, the company sold $3.6 billion in cars and trucks in China, compared to only $3 billion in the United States.
Despite the fact it is very much under the protectionist cloud brought on by Trump, even Apple last month shifted its production of the Mac Pro entirely to a factory just outside Shanghai. The U.S no longer holds the clout it once did.
One of the best examples of that is Harley Davidson. The company announced earlier this year that retaliatory tariffs by the EU would cost the company between $100 and $120 million a year. At the same time, China’s retaliatory tariffs against the United States have increased from 30 percent to 55 percent in that theatre of the trade war.
As a result, the Wisconsin-based company has already announced plans to open a new plant in Asia, partly to escape the large Chinese counter tariff on goods from the United States.
Sen. Warren also claimed that only large multinational companies benefit from free trade as currently practiced. In fact, many more than that benefit - and they represent much of the voting base of the Democratic Party. New-collar workers - in Silicon Valley and other high-tech hubs - are very much cosmopolitan citizens of the world. They could move to Frankfurt or Milan in a heartbeat. People in these centres of commerce share a common outlook, a common way of speaking, and a common belief system.
While the rust belt has lost jobs, most of them have shown up in the Sun Belt - where software companies help equip the robots that are driving the loss of jobs in the industrial heartland.
Sen. Warren and President Trump both look at the world through the same rose-tinted glasses which depict the States as having market sway it no longer can claim. It is a common view of the world as seen by many over the age of 70 - a demographic to which Warren and Trump both belong.