Photo: Qilai Shen/Bloomberg/Getty Images
I have said many times in speeches that in the world of trade, there is no rule against hypocrisy. It turns out that there is also no rule against irony, which is a close relative. Here are a few examples:
The United States vigorously opposes Chinese economic coercion. Thanks to former colleague Matt Goodman, CSIS has authored a major report on that subject which details examples of Chinese coercion against Australia, South Korea, Lithuania, Norway, and Mongolia, among others, and makes recommendations on how targeted countries can either preempt it or deal with it once it occurs. At the same time, the United States has not been reluctant to employ similar tactics, most notably against China during the first Trump administration. It now appears we will be seeing them again in the incoming administration, initially via 25 percent tariffs on Canada and Mexico. This is an obvious attempt to use trade tools to obtain a political result only distantly related to trade, in this case, to force the other countries to take additional actions related to migrants and fentanyl.
The Chinese regularly call out these tactics when employed against them, conveniently ignoring that they pioneered the concept and are more guilty than anyone else—a sterling example of hypocrisy. An additional irony, of course, is that, for the most part, these tactics have not worked very well. Some $300 billion in tariffs the United States imposed on China in 2018 and 2019 did not result in policy changes that we sought and did not even result in all the purchases of U.S. products that were promised. In addition, I think most, if not all, of the countries targeted by China, would say the tactics did not fundamentally alter the policies that irritated the Chinese.
Another irony related to the same threat is that the incoming president has frequently complained that energy prices are too high and has promised to cut them but, at the same time, is proposing 25 percent tariffs on Mexican and Canadian oil and gas, which will only increase prices at the pump. The domestic oil industry is lobbying for an exclusion from the tariffs, which they may well get, but the Canadians are suggesting that an appropriate response should be an export tax on—wait for it—their oil and gas. In that case, Canada would get the tariff revenue, not the United States, another irony.
A third irony is that the president-elect has long supported efforts to reduce the U.S. trade deficit and at the same time has demanded a strong dollar. As every economist can tell you, the two goals are incompatible. As the dollar strengthens, U.S. exports become more expensive, imports become cheaper, and the trade deficit grows. Some of his would-be advisors are allegedly plotting ways to ensure dollar depreciation or even devaluation, which is contrary to what Trump has been saying. We will see how that works out.
Fourth, Trump famously likes to approach international problems bilaterally. He has little patience for multilateral or plurilateral institutions or agreements. That means he focuses on U.S. trade deficits with specific countries. In his first term, he targeted the big deficit countries—China, Japan, Korea, Mexico, and Canada and didn’t pay much attention to those with which we had surpluses, like Australia, or small deficits. Currently, he is following a similar path, complaining about China, Canada, and Mexico, with the others likely to come later. A new addition to the list will be Vietnam, where our deficit is now our fourth largest. The irony is that with respect to both Mexico—where the deficit has also gone up since his first term—and Vietnam, the growth in the deficits is largely his fault. The tariffs he imposed on China in 2018 and 2019 led to increased movement of production out of China—by both Chinese and Western companies—in order to avoid the tariffs. The big winners of that movement have been Vietnam and Mexico, whose trade deficits have grown as China’s has shrunk.
Finally, an irony not related specifically to Trump is the perennial realization that while the public supports “Buy America” and manufacturing in America, they continue to buy at Walmart and Target and online at Temu and Shein. If you are feeling charitable, you can call this cognitive dissonance, but if you are feeling grumpy, you can call it yet another example of hypocrisy.
These are only a few examples in the trade area—space does not permit more—and if one looks beyond trade, one can find many more. There are two conclusions to draw from these stories. The first is that our political leaders are increasingly shameless in making conflicting statements that cannot possibly all be true at the same time. The second is a reaffirmation of something Abraham Lincoln allegedly said: “You can fool all the people some of the time and some of the people all the time, but you cannot fool all the people all the time.” I leave it to each of you to decide if you are in the “fooled” category, and I leave it to history to judge whether Trump can indeed fool all of the people all of the time.
William Reinsch holds the Scholl Chair in International Business at the Center for Strategic and International Studies in Washington, D.C.
