Editorial: Stabilizing trade policy could ease recession fears
Vice President Mike Pence brought an optimistic economic message to Detroit Monday, saying his boss has delivered on the promise of prosperity the president made three years ago as a candidate in a similar speech to the Detroit Economic Club.
Pence chided naysayers who are warning — and in some quarters, cheering — about the mixed signals the economy is sending on the likelihood a recession is coming.
Noting the strong retail sales report last week, and still hopeful employment and household income numbers, the vice president touted the Trump administration's regulatory reductions and tax cuts that jolted the expansion to new heights.
But the nervousness about the future is not all rooted in selective readings of economic indicators, nor in the perverse longing by President Donald Trump's opponents for an economic collapse that would doom his re-election hopes in 2020.
Much of the anxiety centers on the impact of trade policy, some of which Trump controls, and some he doesn't.
Pence made a pitch for the passage of the United States, Mexico, Canada Agreement (USMCA) negotiated by the administration to replace the North American Free Trade Agreement (NAFTA). This is a deal that should thrill Democrats, since it encompasses most of the demands of labor unions and for the first time involves the United States deeply in the labor policy of other nations.
Mexico and Canada have approved the pact, but House Democrats are dug in, refusing to move on a measure that could chase away the economic jitters and give Trump a victory ahead of the election.
Pence promised that passage of USMCA would bring manufacturing jobs to America. Maybe. But it would for sure offer clarity to automakers and other manufacturers about what the trade future looks like and allow them to make their plans accordingly. The current environment is working against investment and expansion.
House Speaker Nancy Pelosi should bring USMCA to the floor for debate and a vote.
The larger piece of the trade mess belongs to Trump. He is convinced that trade wars work, and has used tariffs to force America's trading partners to grant the U.S. more favorable terms. His biggest target is China. The president is needlessly obsessed with the trade imbalance with China and, rightfully, that country's unfair trading practices.
The stock market has tracked the ups and downs of the negotiations with China.
"President Trump believes China wants to make a deal," Pence told the Detroit audience. "But it has to be a deal on our terms. China has had it too good for too long."
China may not see it the same way, and may in fact be waiting Trump out, hoping a new president will allow it to keep doing what it's always done rather than risk rocking the economic boat.
A downturn can become a self-fulfilling prophecy, if the doomsayers convince consumers and manufacturers that the sky is about to fall.
Congress and the president should do what they can to shoo away doubts by quickly negotiating an end to the trade war and approving USMCA.