The Corner

Economy & Business

On Trade, Trump and Clinton Are Indistinguishable and Wrong

Yesterday, the CEO of MGM Resorts International, a lifelong Republican, endorsed Hillary Clinton for president. In an op-ed in the pages of USA Today, Jim Murren pointed to his policy differences with Donald Trump as justification for his support for Clinton. But boy was I was surprised to read him say that Clinton is better on trade than Donald Trump. He writes, for example, “​One candidate in the race has pledged to support trade agreements that will boost our economy and benefit American workers,” and, “We’re all looking for the candidate who will promote economic growth through greater trade.”

Murren is not alone in believing that Clinton is better on trade than Trump — but that doesn’t make it true. I realize that Clinton is free-riding on her husband’s free-trader reputation but I don’t think we should be fooled. She is obviously pro-trade in the sense that she is pro-exports but then — so is Trump. Hillary’s speech last week in Michigan was striking, however, for how similar it was to Trump’s speech in Detroit a few days before, especially when talking about the Trans-Pacific Partnership trade agreement, the Chinese, and about imports being bad for American workers. Read her speech last week if you don’t believe me. Here is a tidbit:

So my message to every worker in Michigan and across America is this: I will stop any trade deal that kills jobs or holds down wages — including the Trans-Pacific Partnership. I oppose it now, I’ll oppose it after the election, and I’ll oppose it as President.

As a Senator from New York, I fought to defend New York’s manufacturers and steel-makers from unfair Chinese trading practices. And I opposed the only multilateral trade deal that came before the Senate while I was there, because it didn’t meet my high bar.

As Secretary of State, I fought hard for American businesses to get a fair shot around the world and to stop underhanded trading practices like currency manipulation and the theft of intellectual property.

So as President, I will stand up to China and anyone else who tries to take advantage of American workers and companies. And I’m going to ramp up enforcement by appointing, for the first time, a chief trade prosecutor, I will triple the number of enforcement officers, and when countries break the rules, we won’t hesitate to impose targeted tariffs.

Hillary opposes TPP. She will protect workers against Chinese imports and “currency manipulation”and force American consumers to pay higher prices. She will impose targeted tariffs and, let’s not forget, she will hire a chief trade prosecutor and triple the number of enforcement officers.

This is Trump in Detroit:

Hillary Clinton’s Trans-Pacific Partnership (TPP) will be an even bigger disaster for the auto industry. In fact, Ford Motor Company has announced its opposition to the deal.

According to the Economic Policy Institute, the U.S. trade deficit with the proposed TPP member countries cost over 1 million manufacturing jobs in 2015. . . . 

Because my only interest is the American people, I have previously laid out a detailed 7-point plan for trade reform, available on my website. It includes strong protections against currency manipulation, tariffs against any countries that cheat by unfairly subsidizing their goods, and it includes a renegotiation of NAFTA. If we don’t get a better deal, we will walk away.

At the center of my plan is trade enforcement with China. This alone could return millions of jobs into our economy.

China is responsible for nearly half of our entire trade deficit. They break the rules in every way imaginable. China engages in illegal export subsidies, prohibited currency manipulation, and rampant theft of intellectual property. They also have no real environmental or labor protections, further undercutting American workers.

Hillary’s not better on trade and she’s not supporting TPP, as Mr. Murren claims he wants from a candidate. The truth is that, on trade at least, her speech was sadly indistinguishable from Trump’s. You can read this excellent piece by my colleague Dan Griswold on this issue.

Now, maybe Clinton’s anti-TPP position is just political posturing. To be sure, there’s little doubt about how terrible Trump would be on trade since this is the one issue where he has been remarkably consistent over the years. What we know, however, is that while Clinton may have favored TPP in the past, she has repeatedly said she would oppose the agreement during her campaign for president. Is she lying this time or was she lying before?

Either way, the reality is that her instincts on pretty much every policy issue are incorrect. She wants the government to grow and she wants to smother the labor market to death with new mandates and tell entrepreneurs how to run their companies and pay their workers. She wants more regulations and she wants the government to have a say in what the innovations of the future should be. She wants a one-size-fits-all labor market and opposes the sharing economy. She is a drug warrior and “the candidate of the war machine.” She is also in favor of the worst crony programs out there, like the Ex-Im Bank. For all these reasons, it is hard for me to believe that she is good on trade. And one thing is sure: Like most people, Hillary fails to understand that imports — not exports — are what improve the lives of millions of Americans, especially low-income Americans. No one explained it better than Paul Krugman in a beautiful and beautifully succinct article called “What Do Undergrads Need to Know About Trade?“:

​We should be able to teach students that imports, not exports, are the purpose of trade. That is, what a country gains from trade is the ability to import things it wants. Exports are not an objective in and of themselves: the need to export is a burden that a country must bear because its import suppliers are crass enough to demand payment.

Douglas Irwin had a great illustration of the wide the benefits of imports are and how narrow those of exports are:

While the gains from trade can seem abstract, the costs of trade restrictions are concrete. For example, the United States has some 135,000 workers employed in the apparel industry, but there are more than 45 million Americans who live below the poverty line, stretching every dollar they have. Can one really justify increasing the price of clothing for 45 million low-income Americans (and everyone else as well) in an effort to save the jobs of just some of the 135,000 low-wage workers in the apparel industry?

Unfortunately, very few lawmakers are real free traders and understand the value of imports.


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