Here’s a letter to the Wall Street Journal (with apologies to the great Dwight Lee for my stealing from him this post’s title):
In “Bad Trade Timing ” (Nov. 26) you report – accurately – that “[s]tripping out the investor dispute-settlement provision [from NAFTA] was an American demand. U.S. trade rep Robert Lighthizer and Mr. Trump figured that fewer Americans would invest in Mexico if contract disputes were settled in Mexico’s notoriously corrupt courts.”
Thus does the Trump administration yet again reveal as mythical the widespread belief that it is a friend to American businesses generally.
This administration is, of course, a friend to the relatively few politically powerful businesses that profit behind high tariffs at the larger expense of the American public. But by purposefully decreasing Americans’ expected profitability of investing abroad, the Trump administration intentionally damages the general interests of American businesses and investors. How is such a policy “pro-business,” “pro-market,” or “pro-growth”?
Making matters worse is this inconsistency in Trump’s whackadoodle trade policy: by working to reduce American investment abroad – investment that, by the very structure of international commercial accounts, causes U.S. trade deficits to be lower than otherwise – the Trump administration causes U.S. trade deficits to be higher than otherwise. Mr. Trump either has no idea what U.S. trade deficits are or his incessant yelping about U.S. trade deficits is pure theater meant to hide from Congress and the general public his doling-out of special privileges to his cronies.
Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030