The protectionist logic of 'America First' has been critiqued ad nauseam in recent months. Now detractors and defenders alike can see it in action. On Wednesday Trump signed into law steep tariffs on solar panels (30%) and washing machines (20-50%); China being the clear target. In his own words, "our action today helps create jobs in America for Americans". It's a simple message, one that resonates strongly amongst Trump's base. However, the numbers tell a slightly more complex story.
Last year two (foreign-owned) solar panel manufacturers in America went under, taking 3,200 jobs with them. Both Suniva and SolarWorld Americas blamed their financial woes on China. The two companies complained to the US International Trade Commission who agreed that Chinese imports had indeed hurt American manufacturers. It's no great secret that China routinely skirts anti-dumping laws all over the world, but it is nevertheless interesting that neither company was required to prove that Chinese exporters had engaged in illegal practices.
The real problem though is that these tariffs are
unlikely to resurrect any of the lost jobs. In fact, America's peak solar body believes that the industry will shed a further 23,000 jobs this year alone. And since the tariff on imported panels is likely to be passed on to customers, it could also result in reduced demand.
The washing machine tariffs, meanwhile, are simply a free kick to US white goods manufacturer Whirlpool - at the expense of consumers. The world's largest washing machine producers have signalled significant price increases to ameliorate the damage done by the Treasury. Many within Trump's own party are
skittish about using such blunt instruments. They have good reason to be: the intended target (China) isn't even the largest exporter to the US, it is fourth behind Malaysia, South Korea and Vietnam.
As the US government retreats behind a wall of border taxes, Chinese
diplomats are putting ink to free-trade agreements at breakneck speed. In fact, you'd be forgiven for mistaking the White House and the Zhongnanhai some days.
The job of
selling America's decision to the world fell to Commerce Secretary Wilbur Ross. Speaking at a snowed-in economics powwow in Switzerland, Ross used a mix of triumphalism and victimhood to win over the attendees. Needless to say it largely fell on deaf ears at the famously pro-trade-liberalisation conference. While Ross at least only received a muted response, his colleague US Treasury Secretary Steve Mnuchin was
harangued by European central bankers for appearing to back a drastically weakened US dollar.
The president himself has used his time in Davos to cajole foreign CEOs to expand their operations in America. While he has evidence of a growing economy on his side; it's yet to be seen whether European executives are as pliant as those stateside.
But it hasn't been all Trump at Davos. Alibaba's enigmatic CEO Jack Ma shocked crowds with his blunt assessment of automation and artificial intelligence, "it is going to kill a lot of jobs". His counterpart at Google, Sundar Pinchai was significantly cheerier, arguing that AI would be a comparable technological leap to the harnessing of fire by early humans or electrification.
French president Emmanuel Macron continued to win admirers with his
strong rhetoric on the topic of climate change, as did Canadian prime minister Justin Trudeau on the topic of sexual harassment and equality.
As all this was happening, the long-suffering TPP moved much closer to
becoming a reality - without the US. Negotiators from the 11 remaining Pacific rim nations signed a draft agreement ahead of ratification next month in Chile. When Trump withdrew the US from the talks almost exactly a year ago, it appeared as though the TPP would collapse. It's a stunning turnaround, although it should be noted that with America involved the TPP countries represented 40% of the global economy; without America it is just 15%.
