Lindsey Graham

Perspective on Multilateral Trade Deals and Trade Wars

President Trump’s intention to impose tariffs on imported steel and aluminum caused ripples on Wall Street, outcries from companies that depend on global supply chains and warnings from economists who cited the cost of trade wars.

President Trump’s intention to impose tariffs on imported steel and aluminum caused ripples on Wall Street, outcries from companies that depend on global supply chains and warnings from economists who cited the cost of trade wars.

President Trump’s threat to impose a 25 percent tariff on steel imports and 10 percent on aluminum imports stunned Wall Street, infuriated US international trading partners and confounded economists.

Trump defended his proposed tariffs as campaign promises he intends to keep. More fundamentally, they reflect his view that bilateral trade deals that his administration would negotiate would be better for Americans than multilateral trade pacts, which he has deplored as unfair to US workers. So far, few nations have shown much interest in bilateral trade deals. The United States and a post-Brexit United Kingdom will need to work out bilateral trade arrangements, but that can’t occur until the UK is officially out of the European Union.

Stunned Wall Street investors worry about the ripple effects of a trade war on the broader US economy. International trading partners are contemplating retaliation. Economists point to the unpleasant history of trade wars. Trump says trade wars can be good and winnable.

Like immigrant bans and border walls, unilateral tariffs have gone out of favor in the globalized economy. Since tariffs levied as a cure to the Great Depression, which in actuality deepened and lengthened the depression, industrialized nations have moved toward multilateral military, diplomatic and trade arrangements. NATO, the United Nations, the European Union and the North American Free Trade Agreement are prime examples.

The motivation for multilateral arrangements is to provide for greater security and enhanced economic opportunity at the expense of some domestic industries and workers. The underlying macroeconomic theory is that allowing countries to realize their competitive advantages on a greater scale will create more prosperity than protecting domestic markets. The winners tend to be consumers and global companies that have clear rules to follow for their international supply chains. The losers are industries and economic sectors that can’t compete globally.

The losses are not insignificant and can be enormously destructive in regional or state economies such as the Rust Belt. Politicians and organized labor have responded to abandoned factories, displaced workers and failing farms by blaming “free trade” and taking aim at NAFTA and the proposed Trans-Pacific Partnership, which was intended to connect US economic interests into an Asian Pacific trading community.

Even though Trump withdrew from the TPP, the other 11 nations involved have continued to pursue a trade pact among themselves, for among other reasons self-protection against China’s growing economic power and its interest in pursuing separate trade deals with Japan, Indian and South Korea. European nations created an economic union, including a common currency, to leverage their collective market in the face of a dominating US economy, which now boasts a $17 trillion annual gross domestic product.

Along the way, the globalization of finance overwhelmed global trade in goods. Capital sloshes across national borders thanks to creative finance and the advent of shell companies, almost without regard to national banking regulations or tax policy.

One of the largest ironies in the current trade dispute is that China’s excess capacity in steel and aluminum production has driven down prices globally, as China has until recently encouraged its corporations and wealthy individuals to invest billions in overseas businesses and real estate. Lower prices and a stream of investment capital have fueled economic growth from Africa to America.

The United Kingdom’s vote in 2016 to exit the European Union a year from now has revealed how difficult it is to depart from a multinational economic arrangement. Currency exchange restrictions, foreign worker status, border crossings and trade are complex issues and, depending on final Brexit agreements, could crimp international investment in the UK, discourage immigrant labor and require a hard border with Ireland.

Trump officials say US steel and aluminum producers need protection because they are vital to American security interests, which is akin to developing countries defending tariffs to protect their infant industries. One challenge with selective tariffs is they have a habit of spreading. For example, Trump threatened to impose tariffs on European autos if the EU retaliated to his steel and aluminum exports.

Former US trade officials say the Trump tariffs violate international trade agreements and lead to litigation before the World Trade Organization. Trump might consider withdrawing from the 160-member WTO, but trade officials warn that could risk unraveling the global economic order, which dates back to the 1994 General Agreement on Tariffs and Trade. One of the GATT principles is preventing countries with excess capacity in a commodity from dumping products on the international market at below cost. Some have argued the United States should pursue an anti-dumping case against China. U.S. Steel argued for that approach as far back as 2016.

Trump’s call for tariffs surprised Republican leaders on Capitol Hill. Over the weekend on Face the Nation, South Carolina GOP Senator Lindsey Graham said Trump should reconsider imposing tariffs because they raise consumer prices and “let China off the hook.” “China wins when we fight with Europe. China wins when the American consumer has higher prices because of tariffs that don't affect Chinese behavior. If you want to affect China get back in the Trans-Pacific Partnership, be present in Asia, hit them on intellectual property theft, hit them on currency manipulation, hit them about steel dumping. China is winning and we're losing with this tariff regime.”

 

A Day for Frontrunners to Forget (Except UConn)

Except for the UConn women’s basketball team, it was a bad day for frontrunners as Donald Trump’s march to the GOP nomination got trickier and the cloud grew grimmer over Hillary Clinton’s candidacy as the Democratic nominee.

Except for the UConn women’s basketball team, it was a bad day for frontrunners as Donald Trump’s march to the GOP nomination got trickier and the cloud grew grimmer over Hillary Clinton’s candidacy as the Democratic nominee.

The only frontrunner to win Tuesday was the University of Connecticut women’s basketball team, which captured its historic fourth straight national championship. Meanwhile, the Republican and Democratic presidential frontrunners lost in Wisconsin, and not by buzzer beaters.

Ted Cruz and Bernie Sanders each racked up more than 50 percent of the vote in the Wisconsin Republican and Democratic primaries, respectively. Their wins on Tuesday mean more intrigue in the nominating process, which already has had more twists and turns than whodunits.

The Cruz victory could be the turning point for the “stop Trump” movement. The delegates Cruz won in Wisconsin make it that much harder for Donald Trump to accumulate the required delegates to capture the GOP nomination before the national convention in Cleveland this summer.

The Sanders victory – his sixth straight triumph over frontrunner Hillary Clinton – may not derail the Clinton locomotive to the nomination, but it raises questions about how high her campaign can fly in the fall general election, especially if the young voters activated by Sanders skip voting.

The storylines in the two parties are comically different. The GOP presidential primary has careened from reality show to peep show. The Democratic primary has resembled a coronation disrupted by a grumpy janitor with an agenda.

However, in many ways the nomination process in both parties is eerily similar. “Outsiders” such as Trump, Cruz and Sanders have drawn more votes than anyone would have predicted before the Iowa caucuses in January. Yet, the unpredictability of the outsiders has added an element of suspense that has largely been absent in recent presidential primaries. 

Cruz may block Trump’s march to the nomination, but he may not be the beneficiary of his success. There is rampant talk of a white knight – AKA Speaker Paul Ryan – riding into a contested convention and leaving with the prize in his saddlebag. Even the conservatives who are bent on denying Trump the nomination don’t have much faith in Cruz as a viable national candidate. Lindsey Graham endorsed Cruz, after saying "if you killed Cruz on the floor of the Senate and the trial was in the Senate, nobody would convict you.”

Sanders’ insurgency has a different effect on Clinton. His outsider campaign emphasizes her insider connections. His plainspoken criticisms of Wall Street, big business and drug companies has underlined her cozy relationships. His bluntness contrasts sharply with her finesse.

Sanders' at times wobbly command of details, as reflected in his interview with the New York Daily News, gives some of his supporters pause. Even though the policies Sanders advocates seem unachievable to most observers, he still comes across as more honest than Clinton. In fact, exit polling shows Clinton failing the honesty test for a hefty chunk of Democratic voters.

Despite the mathematical improbability of Sanders winning enough delegates to elbow aside Clinton at the convention, his string of victories poses more than an inconvenience for the Clinton camp. Sanders only netted a 10-delegate gain from his win in Wisconsin, but that isn’t the real significance of his victory – or victories to come in other states. Democrats have to wonder whether Clinton is too bruised to win in November.

The way the races are shaping up in both parties, Oregonians may be treated to an actual primary contest in May. Sanders has set up a campaign office in Portland and others are likely to follow. We may actually see the candidates and shake their hand while eating an ice cream cone instead of catching a glimpse as they limo in from the airport to a closed-door fundraiser.  

All this means the craziness of the 2016 campaign season will continue into the foreseeable future. There will be more Trump tweets and perhaps even more positions he adopts on the abortion issue. Cruz will step up his crusade against Trump, even as his pessimistic supporters push a “Lose with Cruz” meme. Clinton will have to keep answering questions about a slow-motion FBI investigation into her private email server while secretary of state. Sanders will have to keep explaining how he will turn America into Norway with Medicare and free college tuition for all.

It is a rollercoaster ride that just won’t stop.

Gary Conkling is president and co-founder of CFM Strategic Communications, and he leads the firm's PR practice, specializing in crisis communications. He is a former journalist, who later worked on Capitol Hill and represented a major Oregon company. But most importantly, he’s a die-hard Ducks fan. You can reach Gary at  garyc@cfmpdx.com and you can follow him on Twitter at@GaryConkling.

Bumper Crop of Candidates for Satire

Hillary Clinton wheeling around Iowa in her Scooby van is just the tip of the satirical iceberg for the latest bumper crop of presidential wannabes.

Hillary Clinton wheeling around Iowa in her Scooby van is just the tip of the satirical iceberg for the latest bumper crop of presidential wannabes.

People choose political candidates for lots of reasons, including how well they can be parodied on shows like Saturday Night Live. This year's presidential field looks like a bummer crop of candidates who will provide the ridiculous comments and embarrassing moments that brighten up late-night TV.

Hillary Clinton's official entrance into the presidential sweepstakes over the weekend touched off a wave of negative blasts from political conservatives. But the writers at SNL were licking their chops as the former First Lady headed to Iowa to campaign in a van named "Scooby." You can see the skit take shape.

Clinton faces no serious Democratic challenger so far, so may have to run a shadow-boxing campaign against make-believe opponents. That will be funny to watch on Saturday nights.

Rand Paul entered the race last week and immediately engaged in a series of testy media interviews. This may be a ploy by Paul and his team to "expose" the liberal news media, even though some fellow Republicans thought it "exposed" Paul as an angry candidate. SNL couldn't be happier. It hasn't had a candidate this petulant to parody since Ross Perot.

Ted Cruz was the first candidate to dive officially into the presidential waters. Shunning his home state of Texas as a backdrop, Cruz made his announcement at Liberty University, where, as he often does, Cruz took liberties with facts. His candidacy will excite both SNL and its satirical sister, Fox News.

The latest to join the fray is Marco Rubio, who chose a historic setting in Miami to emphasize his roots from Cuban immigrants. Rubio was one of the key Senate brokers on an immigration reform bill that is anathema to a large chunk of the GOP voters he must now try to woo. The skit almost writes itself of Rubio speaking Spanish to a clump of Iowa farmers.

Soon Jeb Bush is expected to declare his candidacy, unless he plans to turn his sizable campaign warchest into a private hedge fund. The prospect of a Bush III versus Clinton II campaign next fall will inspire all sorts of satire from just about every segment of the political spectrum.

Lindsey Graham, the just re-elected senator from South Carolina who often appears like an aide-de-camp of former GOP presidential nominee John McCain, is exploring a presidential run. It will be too tempting, if he does run, not to spoof him as the grizzled McCain's youthful protege – think Dick Cheney and George W. Bush.

And these are just the big rollers. There are dark horses roaming around the countryside that could add even more comic fizz to the mix. Voters may rue that the presidential election has started, but people who love comedy can wait for the satire to start.

Beheadings May Unite a Divided Nation

Maybe it took the beheading of American journalists to unify a national divided on almost everything to confront the newest danger to world security.Most pundits predicted it would take a miracle to unsnarl partisan gridlock in DC. Maybe it will take something very non-miraculous, like the beheadings of two American journalists by Islamic radicals.

As Congress wanders back to the nation's capital, pressure is building on President Obama to take action against what is viewed as the fast emerging threat posed by ISIS, the Islamic State of Iraq and Syria. The threat is fresh enough, there is even disagreement over what to call it. Obama and others refer to the group as ISIL, the Islamic State of Iraq and the Levant.

Cherry Blossoms and Compromise Bloom

Suddenly Congress is abloom with cherry blossoms and compromises on gun control and immigration reform, a vote to break a Senate filibuster and a presidential budget proposal that angered both Republicans and Democrats.

Granted most of the activity was in the Senate, which has stirred from paralysis in response to the 2012 election and fast-moving demographic changes that could reshape the nation's electoral map. Even Congressman Paul Ryan — the chief budget warrior in the GOP-controlled House — signaled the possibility of a deal with President Barack Obama, despite Speaker John Boehner calling it a plan for deficit spending forever.

The political fault lines haven't evaporated, but leading Republicans are eager to seize the moment to repair tattered relations with minority voters, who vote heavily Democratic, and suburban voters, who are emerging as the key swing votes in many states. Both constituencies balk at some of the more extreme GOP positions.

GOP ballot box failures with African-American and Latino voters were highlighted in Obama's victory last fall. But more important are signs that more bedrock red states such as Texas and Arizona are seeing a marked shift toward the political middle or beyond. That has led to a new political pliancy by the likes of Senators John McCain of Arizona and Lindsey Graham of South Carolina on immigration.