Do not be fooled by the alarm of the trade war, Wall Street is not really losing sleep over tariffs while workers and the environment are under attack by the Trump government.
This Wednesday, China announced an additional 25 per cent tariff on 106 American products worth US$50 billion as a response to Trump’s plan to impose tariffs on 1,300 Chinese exports worth $50 billion, causing the stock market to fall 2% at its opening bell. Opinion pieces throughout the web began touting the dangers of the escalating trade war between the United States and China and how it would negatively affect the US economy. However, the alarm in the stock markets did not last.
Reuters reports that fears were eased throughout the day as Wall Street knows well that the tariffs will not be applied immediately and that the threats are being used as a negotiation tactic between the US and Chinese governments. In fact, by the end of the day Wall Street’s three major indeces had grown by 1%. Additionally, Trump’s new chair of the National Economic Council (NEC), Larry Kudlow, another Wall Street economist to replace his former NEC chair, declared to the press and media sources that the administration is not in a ‘trade war’ by China, but in ‘negotations’.
The free trade establishment is alarmed by tariffs and has successfully put forth the rhetoric of the ‘trade war’ even though the actual threat of one is far from realized. They are afraid of their free market logic being challenged by people in positions of authority, whether it be from Trump’s nationalist agenda or leftist policies to protect workers and the environment. While trade wars could have very negative impacts on the economy, we are not close to the brink of one and, instead, they have given Trump the opportunity to embrace their ‘trade war’ rhetoric to foment his nationalist agenda through trade.
We insist that Trump’s trade and economic policy is not contrary to that of powerful corporations or Wall Street. Rather, it is composed by both ‘nationalists’ like Peter Navarro and Wall Street economists like Wilbur Ross and Larry Kudlow, who are working together to create policy that favors the wealthy. “We’re starting to feel that while markets hate uncertainty, Trump’s bark is worse than his bite when it comes to trade,” said Robert Phipps, a director at Per Stirling Capital Management in Austin, Texas.
Just this week, Trump went after California for having ‘sanctuary state’ legislation which offers more protections to immigrants by limiting law enforcement co-operation with Immigration and Customs Enforcement (ICE) by threatening their protection of public lands and higher environmental standards. New York Magazine reports that:
One prong of this attack involves a lawsuit to invalidate a novel California law that seeks to give the state the right of first refusal for the sale of federal lands within its borders. The second renews an effort by the George W. Bush administration to revoke a long-standing waiver California has held to offer tougher Clean Air Act standards than the federal government, which has led it to adopt fuel-economy standards adopted by 12 other states (and emulated internationally).
An administration can never be pro-worker when public school teachers are under-paid and their schools are under-funded, which has drawn incredible teacher strikes and protests in Oklahoma, Kentucky, and West Virginia in the past weeks, including an immpresive victory by Oklahoma teachers who won a $6,000 pay raise. True pro-worker trade policy would accept Canada’s proposal to end ‘right-to-work’ laws in the United States as part of a NAFTA agreement and would seek strong enforcement of the country’s labor standards for all.
Tariffs can be used as measures to protect the economy from pressures of the international market and as leverage in negotiations with other countries. But they do not, on their own, guarantee anything near fair trade. Fair trade happens when our economy protects all workers and the environment. Fair trade is very much still under attack.
Photo Credit: AP Photo/Sue Ogrocki