July 11, 2017
On November 11, 2016, right after your election, I wrote an open letter providing trade policy advice. It was published by the Washington International Trade Association (WITA).
In the letter I tried to be constructive with suggestions dealing with China, NAFTA, Trans Pacific Partnership (TPP), and the World Trade Organization (WTO).
I then got snarky, and wrote the following: “What’s the alternative? Start a trade war. If all else fails, why not? It has been about 86 years since the last global trade war. The U.S. started it and it was a doozy. Trade collapsed, unemployment skyrocketed, breadlines, dictators, and eventually World War II ensued. Who knows, the 1930s and 40s might have been boring had Hoover, Smoot and Hawley not been so keen to curry favor by protecting the U.S. from imports. The problem is that so few are around who remember it. A new trade war would remedy that.”
As you contemplate wide ranging tariffs to reduce imports, it occurred to me that maybe, just maybe, your staff only shared that paragraph of my letter with you.
If that’s the case, I’m sincerely sorry for even mentioning the notion that a trade war could have a positive outcome. It was an exceedingly immature and irresponsible thing to suggest. I promise not to do it again.
So to set the record straight, Mr. President, please do not impose new tariffs on steel, aluminum, autos, aircraft, semiconductors, ships or for that matter anything else. Right now, when it comes to the economy, you’re on a roll. After reducing regulations, the economy is growing, jobs are being created and the stock market is at a record high. Trade restrictions – which by any measure would have the same impact as imposing new taxes and regulations on the U.S. economy – would dramatically reverse that progress. Equally concerning, the action would invite justifiable retaliation from America’s trading partners, which would reduce U.S. exports.
Mr. President, instead of restricting trade, increase your focus on enhancing U.S. competitiveness by lowering taxes, improving infrastructure, reforming health care, and improving education. If you are successful in those endeavors, trade will take care of itself.
Vice Chair of the Washington International Trade Foundation’s Board of Directors and retired Director of Global Government Affairs at Caterpillar Inc.