Seeking Solidarity During Trump’s 100 Days, Part 2

In my last article, I discussed the first few proposals of Trump’s 100 day plan. Now I go on in the arduous task of trying to find solutions to the legitimate problems Trump seeks to address and then mercilessly making fun of the phantoms of political rhetoric that somehow transformed themselves from being the ravings of talk radio heads and psuedo-journalists to became policy proposals.

“On the same day, I will begin taking the following 7 actions to protect American workers:

“FIRST, I will announce my intention to renegotiate NAFTA or withdraw from the deal under Article 2205…” For someone who is not a typical politician, Trump certainly has gotten the political double speak down. Note here that he says he will announce his intention, not actually do anything. Obama announced his intention to nominate Merrick Garland. We all know how that turned out. Fact of the matter is, NAFTA has minimal impact on the US GDP, but it could have serious ramifications for American consumers, small business owners, and Mexican laborers.  So let’s look at what exactly NAFTA does.

The primary goal was to eliminate tariffs or taxes imposed by countries on imports.  Simple enough.  Bring back those tariffs and Mexico can’t flood the US with cheap goods, right?  Not so fast.

The US imports most of its foreign oil from Canada. Why care about Canada in a NAFTA argument? Well, Canada is one of the signatories of the deal. 40% of our imported oil comes from Canada. Now, before NAFTA, the US had fairly good trade relations with Canada. If Trump threatens to renege on NAFTA, you can bet Canada will slap us with tariffs. The reason why is obvious: Canada trades with Mexico and the US is between them. The CANAMEX Corridor is the main trade route between the three countries and severing ties with Mexico will sever Canada’s connection to the country as well.

Furthermore, NAFTA superseded and replaced our previous free trade deals with Canada, so getting rid of NAFTA means that American small businesses shipping goods to Canada will likely need to pay duties on the goods. This will put a damper on businesses of a certain size growing into international markets. Thus, only larger corporations will have the ability to make foreign investments and therefore reap the benefits of foreign trade while smaller businesses have to compete among themselves on shrinking domestic markets. This would make creating and maintaining a small business even harder than it was before and limit potentials for growth, thereby reducing the number of new businesses overall which will ultimately hurt the economy.

Moreover, consumers will feel the pinch of the tariffs as well. Corporations doing business in Canada and Mexico will “trickle down” the costs of the tariffs onto the consumer, which will make goods even more expensive. In a time when wages are stagnate and the only people getting richer are the very rich, having consumer products become even more expensive is only going to drive more people to the dole.

Two considerations that virtually no one cares to bring up are the Mexican economy and the jobs created by NAFTA. True, 682,900 jobs, mostly manufacturing, were lost or displaced due to the deal. But those jobs weren’t exactly lost.  The job market didn’t dry up; it just changed. New jobs were created as a new economy emerged.  The actual issue was that there was virtually no support besides the dole for those who lost their jobs. Retraining them was not then on the table. Since the passage of NAFTA, retraining programs in some states have helped these former factory workers find new work, making as much – if not more – money than their previous jobs. So we have new jobs here and old jobs in Mexico. But what happens when you take out the link that made this arrangement? Many of these new jobs depend on exporting to Mexico and Canada. The jobs in Mexico depend on exporting to the US. To sever trade ties would mean that the Mexican manufacturing industry would crash, with all the local and global affects that implies.  (A wave of unemployed Mexicans looking for work in the US?)  But it would also mean that those thousands and thousands of new American jobs, the ones based on exporting to our neighbors, would be gone.  That’s right, we would be poorer than we were before and in the process we would impoverish our neighbor as well. So Trump’s plan to ax NAFTA or renegotiate it isn’t even placing America first, let alone using America’s trade power to the mutual benefit of other countries.

“I will announce our withdrawal from the Trans-Pacific Partnership…” For someone who says he wants to “direct my Secretary of the Treasury to label China a currency manipulator” in the very next proposal, you would think he would support a trade deal that not only projects American trade power into emerging markets in the Pacific, but challenges Chinese trade dominance in the region as well. There are plenty of problems with TPP and those should be addressed. But the US should not abandon efforts to actively participate in Pacific markets and thereby check the aggression of China in the region.

“I will direct the Secretary of Commerce and U.S. Trade Representative to identify all foreign trading abuses that unfairly impact American workers and direct them to use every tool under American and international law to end those abuses immediately.” This assumes they aren’t doing that already. Seeing as it is part of their job description, this is, again, mostly a token gesture to his base.

“I will lift the restrictions on the production of $50 trillion dollars’ worth of job-producing American energy reserves, including shale, oil, natural gas and clean coal.” This is a contentious issue. More domestic production in these areas might benefit the economy in the short term, though jobs in the energy sector have declined primarily through the introduction of technology – coal employed a lot more people when picks and shoves were used! – or weak demand due to low energy prices.  Reducing regulation won’t remove those factors.

The long term effect will probably be like an addict getting his fix: he is going to need more later on. Our dependence on disposable energy is merely kicking the can down the road. Forget about the environmental concerns for a minute and just look at the plain fact that these resources can’t be reused. Once they are gone, they are gone and if we remain dependent on oil and coal and so on for our energy, we are going to run out one day and we will continue to be at the mercy of organizations that still have it.

A better plan is to open up these new reserves where environmentally safe, but direct energy companies, through tax policy and subsidies, to pursue better clean and renewable energy technology. Furthermore, incentives such as tax breaks should be given to countries who sell their oil to developing countries so that they can benefit from the boom in our industry. This sort of approach accomplishes three goals: a) it addresses growing environmental concerns through the development of cleaner, renewable, and affordable energy; b) it addresses current energy needs of both domestic and developing markets; and c) it preserves the future of our country’s energy industry by creating a lasting energy plan rather than going the addict route. Plans to “lift the Obama-Clinton roadblocks and allow vital energy infrastructure projects, like the Keystone Pipeline, to move forward” would be moot with these policies. Trump’s plan to “cancel billions in payments to U.N. climate change programs and use the money to fix America’s water and environmental infrastructure” would also be moot since we would already be leading the world in that technology.

Again we see that Trump’s 100 days are going to be spent pandering to the interests that got him elected, regardless of their effects on the country. There is, regrettably, more to follow.

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