Howes: Trade wars reach cease-fire? Must be an election year.
It must be an election year because, right on cue, the nastiest parts of the trade wars are coming to an end.
As the Senate trial of the third impeached president in American history was set to begin Thursday in Washington, senators voted 89-10 to approve the rewrite of the North American Free Trade Agreement. The vote followed by one day President Donald Trump signing Phase 1 of a trade pact with China.
Trade wars? What job-killing, price-increasing, growth-restricting, alliance-destabilizing trade wars? In culminating ceremonies intentionally scheduled to blunt impeachment developments, Trump produced tangible results likely to quicken the nation's economic metabolism in the coming months — which is precisely the point.
Consider the rapid succession of headlines from CNBC after the markets closed on the opening day of the Senate trial: the S&P 500 topped 3,300 for the first time; the market cap of Google parent Alphabet Inc. reached the one trillion-dollar mark for the first time; quarterly earnings in the financial sector are outperforming expectations; and the "pickup truck indicator" suggests "the economy is strong."
It’s political counter-programming 101. Democrats give moderate, anti-tariff House members a win to offset their impeachment votes, and Senate Republicans, as well as the president, get the potent economic wins of promised trade deals and receding anxiety in the equity markets.
The net result: two of the biggest burdens weighing on future economic prospects are poised to recede — just in time for the 2020 presidential race to heat up amid an impeachment trial that is not exactly driving protesters into streets around the country, much less the White House.
We've never been here before. A president, already impeached, is eager to run for his second term as the Democrats scramble to decide who they'll nominate to oppose him. And instead of spiraling downward in a metaphoric reflection of the partisan warfare consuming Congress and the Trump White House, the economy is showing unmistakable signs of resilience typically benefiting the incumbent.
The long-awaited actions come as political attention is focusing intensely on the industrial Midwest battleground states of Pennsylvania, Wisconsin and Michigan, home to the Detroit automakers and the rank-and-file employees Trump considers important constituencies within his base.
Racking up wins that buoy the economy, fatten paychecks, create jobs and juice the stock markets are critical components of Trump's re-election argument. They're also his most effective defense against myriad political charges embedded in the articles of impeachment and the steady drip-drip of fresh evidence often damaging to the president.
Trump is widely expected to be acquitted in a trial conducted by the Republican-controlled Senate. Meaning his case for re-election, particularly in the electorally vital industrial heartland, will hinge on economics — unemployment at 50-year lows, home prices in metro Detroit finally returning to pre-Great Recession levels, equity markets plumbing all-time highs and buoying 401(k) balances, manufacturing recovering from its tariff-induced slowdown.
Business? It gets more certainty, and it gets an ebbing of the anxiety induced by Trump's trade negotiation-by-tweet. Whether, for example, the new United States-Mexico-Canada Agreement replacing NAFTA induces automakers to repatriate assembly jobs back to the United States remains to be seen.
Under the USMCA, vehicles assembled in the region will be required to certify higher regional content to be considered duty-free. And as much as 45% of the content must be produced by workers earning at least $16 an hour — or be required to pay a 2.5% duty.
Under the initial trade deal with China that has been too long coming, American companies will get more access to China's vast market, American farmers will be able to sell more product into China, American tech companies will get greater protection of trade secrets, and China will buy $200 billion in American goods by 2021, promising a U.S. export boom as Trump runs for re-election.
This is no accident, proving that there are no coincidences in politics. There is calculation, the press for advantage, the play to turn a bitter reckoning shared with only two previous presidents (Andrew Johnson and Bill Clinton) into a political victory called re-election.
Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, listen to his Saturday podcasts, or catch him frequently on Michigan Radio’s “Stateside,” 91.7 FM.