Trump wants to cut the trade deficit.
If he does reduce the trade deficit, he will create a lot of U.S. jobs.
The President has marked several economic policies for attention this year. Among them are merit-based immigration, infrastructure and investment. However, of all fixing the trade deficit offers the biggest bang for the buck. The annual trade gap is $620 billion. Reducing this by half would create 2 million jobs.
Manufacturing would benefit most. And that finances two-thirds of business research and development. Investments in intellectual property for new materials, supply chain management, artificial intelligence and the like could boost long-term economic growth by a full percentage point.
China accounts for 60 percent of the U.S. trade deficit. Furthermore, the Chinese habitually subsidize their domestic industries. In addition, they limit imports in areas of rapidly advancing technology. Their goal is to protect their own competitors. Meanwhile, they force foreign multinationals to transfer technology as a condition for market access. In addition they compel cooperation with the Communist Party political agenda and insidious activities monitoring its citizens.
Especially relevant, China has targeted one U.S. industry after another. Among these, metals, solar panels, computer chips and artificial intelligence all have significant economic and national security consequences.
Fears of a trade war are exaggerated. The President’s decision led to the resignation of the head of his National Economic Council and caused turmoil in the stock market.
Even so, this brings a new urgency to finding ways to cooperate with our allies. The governments need to craft a systemic solution to the problems posed by China’s mercantilism.