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Talking Trade blog

A looming US trade war with China? Really?


Published 23 December 2016

Normally, we would not do CNBC interviews or roll out a blog post on the eve of Christmas, New Year’s celebrations and the end of the year “dead time” in the office. But our friends in Washington DC are continuing to make trade and trade policy too interesting to ignore.

The latest is the elevation of Peter Navarro to a newly created post of trade “czar” in the White House.  Navarro started life as a fairly normal Harvard-trained economist, but has gained a reputation as an economic nationalist and a strident anti-China proponent. 

The terms may sound too strong.  Watch the opening 30 seconds of his video documentary in which he urges viewers to “defend America and protect your family”  by not buying Chinese products.  The film is called “Death by China:  How America Lost Its Manufacturing Base.”

Navarro genuinely believes that the United States is already on the losing end of a trade war with the China.   This point is the basis for his economic policy paper on the Trump agenda written with the incoming US Commerce Secretary Wilbur Ross.

Navarro’s anti-China view may be shared more widely.  Carl Icahn said in an interview with CNBC, “If you have a trade war with China…and you’re going to do it, you should get it over with, right?” 

Icahn has just been named by Trump as a special advisor on regulatory issues.

Note that neither of these two positions is subject to confirmation by Congress.  Trump has now personally selected both men to give him private input and wise counsel on trade policy in the White House. 

If your advisors believe you are already engaged in a war or are inevitably going to have one, then you are much less fussed about whatever collateral damage takes place along the way.  You are probably not constrained.  Your “pragmatic business instincts” aren’t necessarily going to reign you in.

Trump appears to be radically restructuring trade policy in his administration.  USTR may no longer be in charge.  Instead policy is moving to Commerce under Ross and to the newly created National Trade Council lead by Navarro.

It is certainly staying interesting.  We will continue to keep a careful watch on what else is happening on the trade front. 

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Dr. Deborah Elms is Head of Trade Policy at the Hinrich Foundation in Singapore.  Prior to joining the Foundation, she was the Executive Director and Founder of the Asian Trade Centre (ATC). She was also President of the Asia Business Trade Association (ABTA) and the Board Director of the Asian Trade Centre Foundation (ATCF).

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