Wednesday, November 9, 2016

Keep An Eye And A Leash On Trump And His Foreign Trade Rhetoric

     South Dakotans, who went for Trump two-to-one (I was a Johnson voter) can feel pretty good about their decision, considering their man won--but with one caveat.  Voters in this state
Not So Fast There,
Mr. President-elect
(from bloomberg.com)
really need to consider the consequences of the President-elect's tough talk on trade. Depending on where he was and when, Trump has promised to declare China a currency manipulator, put TPP talks on hold, and place tariffs as high as 45% on imported goods.  And that's just for starters.  I won't burden you with more of the rhetoric, which you've heard plenty of during the past couple of years.

     What's missing from Trump's politically repetitive tirades is a grasp of how his pugnacious approach to foreign trade might have consequences for Americans whose personal livelihoods and surrounding economic settings might be affected by his hard-line approach. Getting fair and mutually lucrative trade deals is everybody's goal, but I wonder if Trump understands the benefits that Americans get from the trade deals (NAFTA, WTO, among others) that are already in place.  On a manufacturing level, consider that General Motors sells twice as many vehicles overseas as it does in the United States, including more cars in China than here at home. Many are manufactured in or close to their markets, of course, but the profits are repatriated here, as millions of GM shareholders and their 5% dividends happily know.  As far as domestic activity, the U.S. auto industry is responsible for over 7 million jobs (including a 50% gain in direct employment since 2004), many of them created by foreign-owned companies like Nissan, Toyota and Honda, among others. 
     Here on the South Dakota homefront, the situation is just as meaningful. According to the Business Roundtable,  trade supports 130,000 (or 22%) of our jobs.  10% of those jobs are with companies that are mostly foreign-owned.  Last year South Dakota exported $1.4 billion worth of manufactured goods, about $1 billion of which went to our NAFTA partners Canada and Mexico. Our ag exports were even more stunning, totaling about $4.3 billion.  Since 2005, SD ag exports to
Agreed,  Wholeheartedly
our Free Trade Agreement partners have grown by 81%, with the growth to our NAFTA partners (about $400 million) far outpacing the rest.

      Numbers like these should be in the backs of our minds as we assess the hostile rhetoric that Donald Trump has directed at our trade policies.  My general sense is that Trump's bad-mouthing assumes that our trading partners will willingly go along with his threatened actions.  History shows that it doesn't work that way and that retaliation is the most likely result, something we most definitely do not need here in South Dakota.

1 comment:

  1. John,
    In addition to Trump's ill conceived trade policies, I have been pointing out the consequences of deporting 11,000,000 migrant Mexicans, many of whom pick the oranges for his juice each morning. Trump apparently has not given a thought to those migrants jobs that Americans refuse to do and the financial impact it will have on our economy.
    The best I can figure is that all those casino workers laid off because of another Trump bankruptcy will have to pick the oranges.

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