Huge Mistake Coming Up: Trump Set to Promote Trade Hawk Peter Navarro

At one point it appeared Trump was ready to cast aside Navarro. The situation reversed and it's a huge mistake.

In a very unfortunate turn of events, Trump is Set to Promote Trade Hawk Peter Navarro.

The White House plans to promote an adviser known for his hawkish views on trade policy, giving economic nationalists a stronger voice in internal debates as the Trump administration nears decisions on high-profile trade issues.

Peter Navarro, an economist who helped shaped Donald Trump’s 2016 protectionist campaign platform, will be named an assistant to the president, according to a person familiar with the matter.

Mr. Navarro began Mr. Trump’s presidency with broad influence and regular access to the Oval Office but his role was quickly limited after he clashed with the aides who oppose his views on trade deficits and multilateral trade agreements.

The move to elevate Mr. Navarro comes as the White House is nearing decisions on several high-profile trade matters.

It is unclear exactly how Mr. Navarro’s role will change, but the promotion is likely to give Mr. Navarro a more regular role in trade debates and meetings at the White House, according to the person familiar with the matter, a trade expert who has discussed the move with White House officials.

“This gives Peter a more formal seat at the table when trade and manufacturing policies are discussed,” this person said. “That’s something that has been in question the last six months.”

Another Smoot-Hawley Performance Coming Up?

The Smoot-Hawley Tariff Act and the following retaliatory tariffs by America's trading partners were major factors of the reduction of American exports and imports by more than half during the Depression. Economists disagree by how much, but the consensus view among economists and economic historians is that "The passage of the Smoot–Hawley Tariff exacerbated the Great Depression."

It's not often I agree with the consensus economic opinion, but the consensus economic opinion of Smoot-Hawley is undoubtedly correct.

Greenspan on Free Trade

Free trade is one issue on which Alan Greenspan was unwaveringly correct.

''We can erect walls to foreign trade and even discourage job-displacing innovation,'' Mr. Greenspan said. ''Tensions might appear to ease, but only for a short while. Our standard of living would soon begin to stagnate and perhaps even decline as a consequence.''

Mr. Greenspan disagreed with Mr. Kerry's proposal to link free-trade agreements with commitments by other countries to enforce tougher protections for workers and the environment.

Federal Reserve Chairman Alan Greenspan expressed concern Friday that Americans are losing faith in the benefits of free trade. He warned that efforts to erect protectionist barriers were "unwise and surely self-defeating."

"The evidence is overwhelmingly persuasive that the massive increase in world competition--a consequence of broadening trade flows--has fostered markedly higher standards of living for almost all countries who have participated," Greenspan said in a speech to foreign ambassadors at a conference in Dallas.

"The United States has been in the forefront of the postwar opening up of international markets, much to our and the rest of the world's benefits," Greenspan said in prepared remarks [to Congress]. "It would be a great tragedy were that process stopped or reversed."

Greenspan the Maestro

Bob Woodward dubbed Greenspan the "Maestro" in a book by that title.

He has since been vilified for his role in the housing bubble. The one thing Greenspan was never given credit for was his unwavering support for free trade.

Reaching Out to AFL-CIO

On February 22, I blasted Trump for Reaching Out to the AFL-CIO.

A couple of readers asked what's the matter with talking. Today we have the answer: everything.

This is not a case of talking with rogue foreign powers in an attempt to stop a war. This is a case of talking with and listening to trade-policy morons seeking to start a trade war.

States like Michigan and Ohio pushed Trump over the top in his victory over Hillary, but bad policy is bad policy.

Clueless About Trade

Trump does not understand trade deficits. The "art of the deal" cannot work when you don't understand essential points.

To understand the math, please see Trump's Tariffs Show He's "Clueless About Trade".

Trump's trade policies are set to exacerbate the next global recession.

Mike "Mish" Shedlock

The principal reason Trump is in the White House is he promised to protect U.S. jobs. His support in the Rust Bel states (Michigan, Wisconsin, Ohio, Pennsylvania0 was from his promise to protect American jobs. So if his trade policy now is about protecting some U.S. industries, you should not be surprised.

Typo: "Rust Belt states..."

My central point is that trade policy should not be about which country 's workers will work cheapest. That is a race to the bottom. Trade should be about the qualityof the product. The German's understand this. Their products are quality, and their workers are well-paid. That is a win-win. U.S. companies should compete with other countries with quality products, not cheapest workers.

Mish: Free trade proponents (and flacks) have for many years been saying that Smoot-Hawley caused the Great Depression. It is standard myth or propaganda). Since you mentioned Smoot-Hawley, I felt it germane to point out that few economists believe that the trade act caused the Depression. The standard scare tactic of free traders is by protecting U.S. industries, a depression will be caused.

There is a world of difference between the over-simplified world of theory, where it is smart to have no tariffs on imports even if the other side has high tariffs against your exports, and the real world in which we live. Since the US has become the Importer of Last Resort after decades of one-sided "free trade" deals, it seems that a collapse in world trade would make life worse -- for the exporters! China, Germany, Japan. In that circumstance, threatening to undo the one-sided trade deals may be a great negotiating tactic -- a way of getting those bad actors to level the playing field, which could lead to an expansion in world trade.

Lets see how things play out. Even Mish might be surprised!

Trade should be a competition of products, not a competition about which county has the cheapest labor.

And let's not get into competitions about which country has the highest subsidies to their industry, or the lowest environmental standards, etc. Establish a level playing field, then let the most efficient producer win.

Asking your government to protect your jobs and protect your industries is a recipe for disaster. Hoping for a trade war because you think it will hurt the other guy more than it will hurt you, is just plain stupid. These are all lose - lose scenarios. Yet somehow, it’s easy to rally people to “the cause”. Trump thinks he can “win” a trade war. Hopefully he will won’t extend this to wanting to win a nuclear war.