The White House seemingly in chaos. U.S. businesses buffeted by trade wars and farmers in crisis, all a result of President Trump’s decisions.
But if you think Donald Trump is surprised by any of this, think again. The “disruptor in chief is doing exactly what he campaigned on,” says IEG Vantage senior policy analyst Roger Bernard.
Bernard has analyzed U.S. farm policy for over three decades, first from Washington, D.C. and more recently, from Iowa. Here’s his view on the trade war and upcoming election.
Policy by social media
“Twitter now seems to be the route Mr. Trump likes to use, and he uses it the same way former administrations used the traditional media,” says Bernard. “Mr. Trump uses it as a direct line to his constituents and his public. He does not like to deal with the media.”
Unpredictable by design
Trump’s style is “proudly politically incorrect” and he is intentionally unpredictable,” says Bernard. “He is media obsessed, focusing quite a lot on Fox and twitter. He likes to speak directly to the public.
One of the president’s goals is to remake global trade. Seeing trade victories in China, North America, Japan or elsewhere would help his chances in the 2020 election.
He’s had some accomplishments that solidified farm support, despite the China trade war. Deregulation, especially WOTUS, is one success; tax reform, passed last year, is another. Both will be campaign points for the Trump re-election efforts.
Controlling immigration is another focal point for the president, who unveiled a plan last week that satisfied neither his base nor his critics.
“Immigration has been historically one of the hardest issues to solve, which is why we haven’t had a solution in decades,” notes Bernard. “It’s just too hard to find common ground among the various parties and interests.”
Health care prices is another area Mr. Trump will focus on, especially skyrocketing prescription drug prices. It may be one area where Democrats, Republicans and the White House all come together.
Picking judges – especially for the Supreme Court -- may be Trump’s greatest legacy, says Bernard.
“Based on justices’ ages, he may appoint another one or two more,” he says. “So the imprint he leaves on this country could be significant, for generations to come.”
Economy on solid footing
When it comes to the economy, “patience” is still the policy. Bernard expects no interest rate increases in 2019, and the president has been calling for the Fed to make a rate cut.
“You have a handful of federal officials saying if it would be wise to have a rate cut, but there’s no consensus on this,” says Bernard. “This Fed has said it will be driven by data.”
Election season begins
Some states are bluer (democrat) than in 2016, such as Colorado and Virginia. On the other hand, some states have turned redder (republican) especially in manufacturing regions like Iowa and Ohio. Some ‘purple’ states will be a tossup, such as Arizona, North Carolina, Michigan and Wisconsin. How will people who move from the Midwest to warmer states vote?
In the senate republicans have 22 seats to defend, which indicate the odds could be good for the Democrats to retake the senate; it depends on what candidates they put forward. If Trump wins re-election the democrats need to get four seats to control the senate since the vice president also has a vote.
Bernard sees little chance the house will change political stripes in 2020. “The dems have to defend 31 seats in districts Trump won,” he says. “However, the GOP won 23 house seats with 5% or less of the vote – they were very close. The house majority has not flipped twice in a row since 1954. So democrats will probably stay in control of the house.”
What about trade?
The USMCA continues to be a focal point in Washington. Last week democrats emerged from a meeting far more optimistic about a deal because they believe U.S. Trade Rep. Robert Lighthizer is listening to them on labor issues. An agreement could be reached this year, but the key is when House chairperson Nancy Pelosi, D-Calif., asks Mr. trump to submit language to the house for approval; if she does not do that it won’t come up before this fall.
One of the biggest obstacles getting USMCA passed through congress was the Section 232 steel and aluminum tariffs on Canada and Mexico, but last week the administration removed those tariffs.
Auto tariffs were being considered but now will be delayed, to the relief of the European Union and Japan. A tariff on Japanese auto imports would cost $8.5 billion.
“In the U.S.-EU discussions, the biggest sticking point is agriculture,” says Bernard. “That’s the same as it was way back in the days of GATT.” (The General Agreement on Tariffs and Trade was a global trade agreement in place from 1948-1994.)
“The U.S. insists that Europe includes ag in trade and Europe says no,” says Bernard. “The pressure is going to be building so much we will see ag included in some way -- not to the extent the U.S. wants, and not what the EU wants either.”
The U.S.-Japan deal could be an early Trump win, and it could be decided this summer. Access to the Japanese market was impacted by the Trans Pacific Partnership, which Mr. Trump rejected shortly after he was elected. “Other countries got better access than the U.S., so that’s going to serve as the basis for a deal between U.S. and Japan,” says Bernard.
And now, China
Why did the China-U.S. deal fall through earlier this month? According to Bernard, much of the deal was ready to sign until the Chinese sent back a 150-page agreement with key provisions removed. Those provisions would have put teeth in Chinese law related to intellectual property protection and forced transfer of intellectual property.
“They wanted to do it by regulation and made all kinds of commitments but didn’t stick to them – so this administration pulled back. That’s why you saw the process started on another $300 billion in tariffs coming into the U.S.,” says Bernard. New tariffs won’t kick in until at least the end of June due to public hearings, “so there may be time to negotiate.”
Trump and Chinese president Xi Jinping will meet in Japan in late June. It’s possible they could sign a deal then. What are the odds of that happening?
“I still lean toward ‘yes,’ but it’s a prediction fraught with peril because it involves humans,” says Bernard. “You can’t chart a politician.”
Both Presidents need strong economies, for different reasons. Mr. Xi wants to see China’s growth continue. And President Trump?
“Trump needs a strong U.S. economy if he wants to stay in the White House four more years,” concludes Bernard.