Donald Trump the president looks less and less like Donald Trump the candidate.
While campaigning last year, Trump promised, among other things, to label China a currency manipulator and rework or withdraw from the North American Free Trade Agreement within his first 100 days. Neither is happening.
Trump recently told the Wall Street Journal that he won’t officially accuse China of currency manipulation, at least not any time soon. He hasn’t done anything about NAFTA, except to say “pleasant surprises” are coming. He has continued to threaten tariffs on certain imports from the two countries, but he hasn’t backed that with legislative or policy proposals. For all his bluster, Trump seems to be letting China and Mexico off the hook.
The two countries served as Trump’s most convenient bogeymen during the campaign, when he repeatedly claimed that low-paid workers from Mexico and China had taken millions of jobs that once belonged to Americans. Among Trump’s more memorable accusations:
Mexico is “killing us on trade.”
Trump used the threat of trade wars to great effect during the campaign, convincing millions of American workers that a tougher stance on trade would make them better off. He now seems to be changing his mind, which is not surprising given that hundreds of economists and business leaders have warned that punitive tariffs and other protectionist measures would do more economic harm than good.
It might be tempting to call Trump a flip-flopper, but it’s also worth noting that his views on key economic issues seem to be maturing as he shifts from campaigning to governing. It has certainly happened to other newly elected presidents. Many campaign promises are never fulfilled, which is perhaps one reason Americans have soured on electoral politics.
Many Trump campaign promises would also be reckless if fulfilled. Labeling China a currency manipulator would open the door for US trade restrictions on China, and China would probably retaliate with similar sanctions on the United States. This would spook markets, probably sending stocks down. If such measures actually went into effect, prices of some imports would rise, with many ordinary families paying more. This is not what to do if you want to boost economic growth, a key Trump goal.
Trump has also threatened companies that build products in Mexico with sizeable “border tariffs” if they could just as easily make such goods in the United States. He has tangled on that issue with automakers such as Ford and General Motors, which both build cars in Mexico that are for sale in America. Those flare-ups have been doused by automaker promises to hire more Americans and invest more in America—no border taxes needed.
Trump meets regularly with CEOs and other top business minds, and he undoubtedly gets an earful about the risks of protectionism. He appears to be listening. Trump could still seek trade concessions from China and Mexico as various agencies finalize reports and investigations into America’s trade relationships. Perhaps most likely are targeted, modest requests on trade from key partners. But the odds of outright trade wars seem to be dropping. That is good for businesses and might even benefit their workers at some point.
Rick Newman is the author of four books, including Rebounders: How Winners Pivot from Setback to Success. Follow him on Twitter: @rickjnewman