If President Donald Trump doesn’t soon resolve the international trade war he started with tariffs, America’s booming economy will be derailed.
And what a shame that would be.
Unemployment is near record lows across the country and here in Fresno, and American workers are seeing the benefits.
There’s more laughter in coffee shops. You see people driving new cars. And there’s money left after the bills are paid to buy the kids clothes or toys, take in a Grizzlies baseball game, or head to our wonderful Fresno Chaffee Zoo.
Despite my disagreement with some of President Trump’s domestic and foreign policies, I endorse the federal tax cuts and some of the deregulation he has put together with the Republican-led Congress. These cuts have kicked what was a medium growing economy into overdrive.
The No. 1 Question
But a big question accompanies this return to prosperity for families and businesses that suffered greatly during the Great Recession.
How long will the good times last?
The good news is, we could enjoy a long ride on America’s powerful economic train.
However, President Trump, along with Republicans and Democrats in Congress, must have their eyes on the threats ahead. If they ignore the warning signs, our economic boom will be at risk.
Negative Impacts of Tariffs
What are these threats?
President Trump’s tariffs, the labor shortage gripping our country, and Washington’s failure to pass comprehensive immigration reform are on my list.
The most immediate threat is the international trade war. News about retaliatory tariffs imposed by foreign countries — many of them staunch American allies — flood my email box. American companies are searching frantically for alternative sources for what they need or seeking alternative components.
Ford recently announced that it was canceling plans to bring its Focus Active model from China to the U.S. The automaker said that President Trump’s 25% tariff on cars it builds in China was the reason.
Nearly every American is beginning to pay the price for these tariffs. And it doesn’t matter if you are a farmer whose export markets have dried up, a manufacturer dealing with the high price of aluminum, a doctor needing a new CT scanner or the “average Joe” looking to buy a new smartphone.
History tells us that no one wins in a trade war.
In 18th and 19th century Europe, ships were blocked from ports, captured and sunk. Trade became increasingly difficult, allowing America’s nascent economy and maritime fleet to grow quickly.
President Herbert Hoover’s signing of the Smoot-Hawley Act in 1930 raised tariffs on over 20,000 goods to an average rate of 40 percent. Hoover’s goal was to protect American manufacturers and farmers and lift America out of The Great Depression. Instead, it prolonged the hard times.
Fortunately, President George W. Bush reversed course after his tariffs on foreign steel raised prices for consumers and caused long production delays.
Like many Americans, President Trump is concerned about China’s theft of technologies and intellectual properties and the games the country plays with its currency. But these problems should not be addressed exclusively with tariffs and trade wars.
How to Fix International Trade
I support policies that, as President Trump says, put Americans first; however, we have to realize that trade is not a boxing match. Our neighbors do not have to lose in order for us to win. A good trade policy should be a rising tide that lifts all boats, including countries that have always been our allies.
I urge the president and Congress to address and reauthorize European Union trade pacts and continue conversations with Canada and Mexico to undo the recent tariffs imposed on our North American neighbors. The goal should be to help all American workers and companies and promote flourishing economies around the world. When our neighbors prosper, illegal immigration to our country ebbs to a trickle.
Additionally, the president and Congress should resume efforts to bring about a Trans-Pacific Partnership with the countries bordering the Pacific Ocean. Japan is the key player because it has the biggest economy in the region other than China. In addition, Japan is America’s fourth-biggest trade partner and a vital export market for West Coast farmers.
I am encouraged that President Trump announced last week that he and Mexico President Enrique Peña Nieto had struck a preliminary deal. However, Trump ally Sen. John Cornyn (R-Texas) says that “a trilateral agreement” involving Canada “is the best path forward.”
“Free trade” allows supply and demand to power the global economy. Free trade knocks down artificial walls between markets and consumers. Under free trade, there are no tariffs or quotas — unless mutually agreed upon by willing partners.
Not only is free trade mutually beneficial to us and our trade partners, these strategic efforts will increase President Trump’s leverage in negotiations with China. For us to be able to successfully compete with the world’s fastest-growing and second-largest economy, North America must be economically and geopolitically united.
Labor Shortage Could Cause Economy to Sputter
When labor is in high demand, wages go up and that’s good for American workers. But when labor shortages are protracted, the prices for goods and services spiral. That’s when the Federal Reserve Bank jumps in and applies its brakes on the economy with higher interest rates.
Some industries are already grappling with labor shortages. I am involved in two — home building and farming — that have big labor shortages today! If left unaddressed, this problem will eventually cripple both industries — not just in California, but all over the country.
Comprehensive immigration reform would address our labor shortages, especially for jobs that Americans don’t want. Reform will allow us to continue enjoying the tremendous benefits that immigrant brainpower and investment bring to our country.
Immigration Strengthens Our Economy
The Trump administration wants to eliminate illegal immigration. Most of us, including me, agree on that. My issue is, the administration is cutting legal immigration, too.
Since President Trump took office, his administration has granted 13 percent fewer visas, approved fewer refugees and encouraged Congress to radically shrink legal immigration. The administration also has gone so far as to order the removal of hundreds of thousands of legal residents here from war-torn countries and countries hit by natural disasters.
Did you know that 43 percent of companies in last year’s Fortune 500 were founded or co-founded by an immigrant or the child of an immigrant?
Can you imagine an America without Apple, Amazon, Google, or Walt Disney? What is more American than entrepreneurialism and innovation?
We cannot sacrifice innovation to enact a blanket immigration policy that does not account for merit or talent.
One of the most well-worn responses to the idea of an expanded guest worker program is that immigrants are stealing our jobs. And I understand why this is an effective line of attack, as 40 percent of hardworking Americans struggle to make it to the end of the month. This is a shame in an economy that is moving as fast as it is.
But while it is an effective talking point, extreme restriction of immigration will not address the wage gap for many working Americans. We need federal funding to assist Americans in learning new skills that move them up the economic ladder. This, paired with comprehensive immigration reform, will improve both our economy and the quality of life for our working class — not just in the short term, but for years to come.
As President Reagan said: In America, our origins matter less than our destinations and that is what democracy is about.
Conservative values are about freedom of movement, trade, and people. If President Trump and Congress work together to resolve tariffs, the labor shortage, and immigration reform, America will enjoy a prolonged period of economic health.