Earlier this week, I had the privilege of participating in a telephone town hall with Congressman Peter Roskam and callers from his Sixth Congressional District of Illinois. Most of the talk was about the recent tax cut, but one constituent stood out from the rest.
The man owns a small electronics manufacturing company in Roskam’s district. While he was very happy with the tax relief and deregulation for businesses like his, it paled in comparison to his concerns over President Trump’s 25-percent tariffs on Chinese imports.
Our caller cannot get the electronics parts he needs to assemble his goods for sale from anywhere else. The little electronic widgets, whatever they are, are only made in China. So he is going to have to pay 25 percent more than he did before and pass along that higher cost to his customers in the form of higher prices, to his workers in the form of lower wages, and to his family in the form of a less profitable business.
Stories like this are happening all over the country, and many conservatives are concerned that the Trump tariff war might trim the sails of the Trump economy.
Tax cuts and deregulation drive up economic growth and create jobs; the tariff war halts and partially reverses this progress. It’s only a matter of magnitude, not of fact. Tariffs are taxes on imports, and they increase the input costs of goods made in America using overseas parts.
At the center of this maelstrom is the chief trade advisor for President Trump: Peter Navarro.
As presidential tsars go, Navarro is an odd choice. A Republican-turned-liberal Democrat who once ran for Congress against an incumbent Republican, Navarro has a history of going down the line left-wing orthodoxy. He opposed the nomination of Clarence Thomas to the Supreme Court as part of a very long public record in favor of abortion rights. He’s on record calling lifelong movement conservatives Ralph Reed, Rush Limbaugh, and Newt Gingrich “buffoons, sociopaths, and zealots.”
The 1994 Gingrich Revolution class of House Republicans were dismissed by Navarro as “bumbling wackos.” The religious, right? “Insufferably bigoted, close-minded, and dangerously well-disciplined stormtroopers.” He even called my old boss Jack Kemp a “dupe” for supporting pro-growth tax relief.
Navarro has a lot more in common with Barack Obama than Donald Trump.
Back in his Congressional run, he castigated the Republican coalition in California as “frightened seniors and white, angry, blue-collar men” (shades of people “clinging to their guns and their religion” a decade and a half later).
He was a strong supporter of Obama initiatives such as illegalized incandescent light bulbs, taxpayer-subsidized wind energy, and carbon taxes. On the environmental front, Navarro is about as liberal as they come. We shouldn’t be surprised – at the 1996 Democratic convention he called Nancy Pelosi “street-smart” and “savvy” and Hillary Clinton “gracious, intelligent, perceptive, and, yes, classy.”
Yet nonetheless, he sits in the White House today as President Trump’s most trusted trade advisor.
Conservatives who want the Trump agenda and administration to succeed need to start asking what he’s doing there. There’s every reason to believe that cutting the corporate income tax rate, adopting full business expensing, and pursuing deregulation in areas as diverse as healthcare, energy, and transportation will result in robust, sustained, and broadly distributed prosperity. The one thing that could derail it is an ongoing trade war urged on by liberal Democrat Peter Navarro.
In the trilogy “The Lord of the Rings,” Theoden the king of Rohan has a treacherous advisor named Wormtoungue. Wormtongue constantly and intentionally gives bad advice to King Theoden, who is weakened every time he takes it. More bad advice leads to more poison for the king. This vicious cycle continues until the Kingdom of Rohan is nearly powerless against the forces of darkness in that world.
The same fate can very easily befall the Trump Administration today. Navarro’s advice on trade is poison to Trump, poison to his chances for re-election, and poison for his ongoing governing coalition.
The baneful toxicity of this trade war is evident from the Tax Foundation’s estimates of the total effect of all announced and enacted tariff measures. If carried through, the economy will shrink by $150 billion and 467,000 fewer jobs will be created. Fully one-third of the economic benefits of the Tax Cuts and Jobs Act will be clawed back.
Whether it’s an electronics manufacturer in Illinois or the U.S. economy as a whole, trade protectionism and trade wars are bad economic policy. Perhaps that’s why Republican presidents like Donald Trump should not take flawed advice from liberal Democrats like Peter Navarro, the Wormtongue of latter day trade policy.
Ryan Ellis is the President of the Center for a Free Economy.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of The Daily Caller.