I'm not sure it's worth the effort to talk much more about Donald Trump's trade policy, but some of his recent statements raise an issue that applies beyond just his particular trade views. The Wall Street Journal article noted in the last post says the following:
As for foreign policy, Mr. Trump said he is "only interested in Libya if we take the oil," and that if he were President, "I would not leave Iraq and let Iran take over the oil." He remains sharply critical of the Chinese, asserting that as President, "I would tell China that you're either going to shape up, or I'm going to tax you at 25% for all the products you send into this country.
Expanding on the Iraq oil point, he has also said this:
The US-led invasion of Iraq in 2003 cost the Pentagon an estimated $1bn a week and led to the death of at least 4,447 US military deaths. In compensation, Trump said, the military should seize the country’s oil fields and funnel off the profits.
“We go into Iraq. We have spent thus far, $1.5 trillion. We could have rebuilt half of the United States. So, in the old days, you know when you had a war, to the victor belong the spoils,” he said.
“You’re not stealing anything. You’re taking - we’re reimbursing ourselves - at least, at a minimum, and I say more. We’re taking back $1.5 trillion to reimburse ourselves.”
So, his main two issues are: (1) he wants to seize Iraq's oil, and (2) he wants to impose a 25% tariff on China (in order to stop their currency manipulation).
Leaving the merits of taking over Iraq's oil fields to other blogs, let me just point out that there is an inherent tension between his two policies. If he really wants to take over Iraq's oil fields, he is going to need to convince the rest of the world to go along with this. China, of course, is an important part of the rest of the world. If he is busy threatening them with a 25% tariff, they are not likely to be very accommodating.
This is all pretty obvious, I think. But it also gives broader insights into why there is so much tough talk about China's currency manipulation, and so little action. There are a decent number of fairly smart and reasonable people who think China is doing something "wrong," in some sense, with its currency policies. (Of course, other smart and reasonable people disagree.) There are also many people who scream loudly that China is doing something wrong, and perhaps aren't quite so reasonable. When you combine these two groups of China critics, there's a lot of support for taking action against China. Nevertheless, despite all the efforts of both groups, no action is ever taken. A big part of the reason is the same as with the tension Trump will face: Trade is not the only policy goal. As long as the U.S. has other policy goals where it needs China's support, it won't push too hard on trade.
Of course, there is some possibility that a President Trump really wouldn't care what the rest of the world thought about anything and would simply seize the oil and impose the tariff. The reality, though, is that he probably would care, and would not act much differently than current and past Presidents on these issues. Pretending not to care about the rest of the world may play well in a Presidential primary, but it doesn't work so well when you eventually have to deal with rest of the world.
