Opponents of Donald Trump spent the first year of his presidency pointing out that he was better at wrecking deals—the Trans-Pacific Partnership, the Iran nuclear agreement, the Paris climate accord—than making them.
But coming on the heels of a trade deal with Mexico, the surprising agreement with Canada—that appears to update and preserve the North American Free Trade Agreement while giving it a new name—allows the president to tell voters that he is indeed a dealmaker like he said.
Of course, new isn’t necessarily better, and the long-term impact on American jobs and the broader U.S. economy will play out over the long-term. But it’s worth noting that the agreement Trump unveiled today in the Rose Garden is being praised by players as different as big banks and big labor, via the Teamsters (though its President James Hoffa stopped short today of a full-throated endorsement).
The next steps will be tricky. Trump promised to send the trade deal to Congress later this year. But the prospect of a House and/or Senate controlled by Democrats who are out to undermine this president—if not impeach him outright—is a wild card for this, or any other part of his agenda. This is what makes the support of labor unions, a natural Democratic constituency, so intriguing. Like Republicans with Barack Obama, Democrats seem automatically opposed, fiercely opposed, to anything Donald Trump wants to do. But how could they oppose a trade deal that labor unions support? By co-opting the Teamsters, Trump is also knee-capping his rivals on the other side of the aisle. Frankly, it’s kind of like Lyndon Johnson’s famous “big tent” strategy, which was to cram as many people in your tent as possible. In LBJ’s parlance, it’s better to have them inside the tent “pissing out than outside pissing in.”
But tough as a deal with Canada was—just days ago it looked dead—Trump’s ultimate objective here could be China, a subject he referred to at length at the press conference.
Here’s the backdrop: In trying to force better behavior from the Chinese, Trump has inflicted pain on lots of Americans. Across the corporate landscape, dozens of companies are taking it on the chin thanks in no small part to Trump’s trade war with Beijing. Some eighty stocks in the S&P 500
nearly one in six—are in a nasty bear market, meaning share prices have plunged at least 20% from their 52-week highs. Examples include Harley-Davidson
and Stanley Black & Decker
. Even as the overall stock market hits new highs, investors in these companies—again dozens and dozens of them—have lost big bucks.
Then there are the farmers. Years invested in building trade relationships with China have gone poof in recent months, as Trump and China’s Xi Jinping ratcheted up their tariff spat. Some American farmers who eagerly voted for Trump two years ago are feeling the pain.
Trump revealed Monday he doesn’t really like tariffs, inferring that they’re just a short-term tactic to squeeze the Chinese into making concessions. Trump keeps pointing out something that has escaped many of his critics: China’s economy is struggling. Growth has slowed. The stock
has tanked. The Communist Party, which runs the show there, is weighing various stimulus measures. Trump doesn’t seem to know that these problems preceded his presidency, but who cares? He has taken advantage of Beijing’s weakness and it may just result in China giving in. “Chinese officials may privately agree” that Trump has the upper hand, writes Bloomberg’s Andrew Polk from Beijing; if that’s the case, look for Trump to squeeze Xi further. In fact, he told us in the Rose Garden that he wants to talk with the Chinese—but “not yet.” The president clearly wants them to twist in the wind for a while first.
A trade deal with China looks unlikely today. But remember—the “smart” crowd was saying the same about Canada just a few days ago. As Trump likes to say: “We’ll see what happens.”
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