Economy

Trump's executive orders on trade: getting tough or just more of the same?

Despite the president's tough talk on trade, his two recent executive orders aren't that different from the stance of the previous administration.

Shipping containers sit at the ports of Los Angeles and Long Beach, California in this aerial photo taken February 6, 2015.
REUTERS/Bob Riha, Jr./File Photo
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Beginning with his campaign kickoff speech, President Trump has accused trading partners of not playing fair.

“China comes over and they dump all their stuff,” Mr. Trump announced at his kickoff event in June 2015, referring to China exporting cheap subsidized goods, and “they devalue their currency so brilliantly,” he added.

Those concerns appeared to surface again last week, when Trump signed a pair of trade-focused executive orders. One order calls for a study of US trade deficits to identify potential trade abuses and cheating with some of the nation's largest trading partners. The second order seeks a more efficient enforcement of anti-dumping laws to keep foreign manufactures from undercutting US companies with cheaper goods.

"If anyone had any doubt about the president's resolve to fix the trade problems, these two executive orders should end that speculation now and for all time," said Commerce Secretary Wilbur Ross on Friday. "This marks the beginning of the totally new chapter in the American trade relationship with our partners overseas."

But despite the president's tough talk on trade, the orders actually continue long-standing US trade policy, say some analysts. While none of former President Barack Obama’s executive orders had the exact same goals as those Trump signed on Friday, his administration also took a hard line against countries that skirted the rules of international commerce, bringing 25 trade enforcement actions at the World Trade Organization, more than any other country during his time in office. In addition, those efforts were informed, in part, by a report very similar to the one commissioned by Trump’s executive order. And stepping up the enforcement of anti-dumping laws, analysts say, is simply low hanging fruit. A Government Accountability Office report called attention to the problem last summer, identifying $2.3 billion worth of uncollected fees.  

“The country-by-country trade deficit report will not add anything of value to the information in the National Trade Estimate which has been issued annually for nearly 30 years,” says Matt Gold, an adjunct law professor at Fordham University. That report, put out annually by the Office of the United States Trade Representative, identifies barriers to trade put up by each of America’s trading partners. As for collecting fees on antidumping and countervailing duties violations, “Any president would have done exactly what President Trump is doing," he adds.

While the new report singles out those countries with which the United States is running a trade deficit, Professor Gold, who served as deputy assistant US trade representative for North America under Mr. Obama, says that this approach doesn’t tell the whole story.

“If you have a country with which we have a trade surplus, they could still be violating trade obligations to the United States, and their violations could be making that trade surplus lower than it should be.”

The most recent trade estimate, for instance, found that the US has a goods trading surplus of $12.7 billion with Australia, and a $15.3 billion services trading surplus. But even then, despite a free-trade agreement signed in 2005, Australian regulators require many radio and TV stations to broadcast minimum percentages of Australian-produced and -performed content, and prohibit importation of several US agricultural products.

Dany Bahar, a fellow in global economy and development at the Brookings Institution, said that more information can be helpful in removing barriers like these. Discussing the executive orders in Brookings's "5 on 45" podcast, he commended the Trump administration for showing a desire to "engage in evidence-based policymaking," and suggests that the White House "use the data [found in the studies] to focus on particular ongoing trade disputes."

"If these disputes are based on actually unfair trade practices by other governments, such as export subsidies or dumping ... then solving these disputes could help restore competitiveness for US goods and therefore, eventually, reduce the trade deficit."

But at the same time, Dr. Bahar, whose research focuses on international economics and development, downplays the impact that this reduction could have for industrial workers. 

"Forcefully trying to reverse a deficit won’t result in more jobs for Americans," he predicts. "It is technology, not trade, that explains the vast majority of lost jobs in the manufacturing sector in the US since the mid-1990s.”

The Christian Science Monitor's Simon Montlake noted in series on US trade and manufacturing that a Massachusetts Institute of Technology study points to automation as "an even bigger culprit [than trade] for the job loss" in US manufacturing from 1990 to 2007.

So why the tough talk on trade? 

“Politics,” Gold suggests. 

Throughout the campaign, Trump’s attention on China's trade practices and condemnation of trade deals like NAFTA and the Trans-Pacific Partnership earned major support from blue-collar workers. But this focus on unfair trading practices – and their consequences for US workers – could also complicate Trump’s meeting with China President Xi Jinping scheduled for April 6 and 7.

“The meeting ... with China will be a very difficult one,” he tweeted Thursday, “in that we can no longer have massive trade deficits and job losses.”

Will such talk win the Trump administration points with voters?

If taking a harder line against trade violations – either through these executive orders or in meeting with foreign leaders – doesn’t soon create more manufacturing jobs, it’s unlikely to make a difference in the eyes of those voters, says Chad Broughton, a senior lecturer in public policy studies at the University of Chicago.

Having chronicled the decline of Galesburg, Ill., a former appliance manufacturing hub, in his 2015 book "Boom, Bust, Exodus," he tells the Monitor in an email that, “my sense from talking to white working class voters in Galesburg is that their support for Trump is fairly cynical and thin.”

“Some are lifelong Democrats that switched [parties] to punish Clinton, in part for her and her husband’s support for NAFTA. They voted for Trump despite serious reservations about Trump's character and competence, and will need to see results in their own lives, and not just symbolism, if they’re going to vote for him again.”