Opinion: With GM the rare exception, Trump winning on trade
When it comes to trade policy, President Donald Trump keeps taking massive strides forward, with any tiny step back representing the rare exception in the pattern of record U.S. economic growth — a phenomenon that was amply demonstrated last week.
First, General Motors announced that it would be closing several U.S. factories and laying off nearly 15,000 American workers, exacerbating ongoing concerns about the President’s “trade war” with China. By the end of the week, though, German carmaker BMW had provided a counter-narrative to the GM contraction by revealing its intention to open a new factory in the U.S. Around the very same time, the leaders of Canada and Mexico joined President Trump in signing the USMCA trade agreement that will replace NAFTA.
GM’s downsizing was inevitable after decades of poor business decisions, and basically represents a long-overdue adjustment to market realities. GM focused its cuts on smaller cars, which have been losing market share for years. The company should have seen the handwriting on the wall long ago, especially after taxpayers saved it from bankruptcy ten years ago with a $20 billion bailout.
BMW’s news, on the other hand, actually reflects how Trump’s trade policies are helping the U.S. economy. The automaker announced that it’s considering building a new U.S. factory in response to anticipated tariffs President Trump is considering on imports of vehicles and automotive parts. BMW currently imports the engines and transmissions for cars manufactured in its South Carolina plant, and some speculate that the company may start building engines in the U.S. to avoid tariffs on those imports.
On the trade front with our largest economic adversary, the president’s counter tariffs on imported products from China are also continuing to squeeze its economy, leading President Xi to agree to a tariff cease-fire for 90 days to allow for more trade negotiations.
China is currently burdened by a disproportionate share of the costs from President Trump’s so-called “trade war,” suffering about four times the losses that have affected the U.S. economy.
That makes the signing of the USMCA at the start of the G20 summit particularly timely, since it proves that Trump really is committed to crafting equitable, mutually beneficial trade deals. If China will agree to compromise, it too can enjoy a new trade agreement with the U.S. that benefits workers in both countries.
Last week’s developments are just the latest indication that Trump’s trade policies are working.
NAFTA was an atrocious deal for the American people, but no U.S. president prior to Trump even tried to fix the deal’s many inequities. Now, thanks to the President’s carefully calculated brinkmanship, we have an entirely new deal that ensures robust trade while protecting American workers.
Some have tried to blame the president’s temporary tariffs for negative economic developments like the GM layoffs, but that analysis ignores GM’s severe structural deficiencies, and BMW’s announcement shows that the tariffs can actually produce positive results for America.
China will likely rush to the negotiating table even sooner now that its leaders have seen that Trump’s approach is bearing fruit. The BMW announcement reveals that America’s economy can survive — and even thrive — under the temporary, targeted counter-tariffs President Trump has used to entice trade partners to the table.
The president’s hard-nosed approach to international trade is already proving to be very effective for the U.S. economy, with rare exceptions to his string of unprecedented successes.
Anthony Scaramucci is the founder of the global investment firm SkyBridge Capital and served in the Trump administration as White House communications director.