Earlier in the week the Trump administration signaled it would appeal a WTO decision that sided with Canada on a bilateral lumber dispute that has gone on for years.
The main issue is an accusation by the U.S. that Canada unfairly subsidizes its industry which hurts American lumber producers. After looking into the matter, the WTO ruled in Canada’s favour.
Yet the U.S. notice to appeal means it will drag on for years longer.
Why? Because the Appellate Body of the WTO, the final arbiter of such matters doesn’t have enough appointed judges to even hear the case. And why is that? The Appellate Body hasn’t been able to function since last December because the Trump administration has refused to appoint replacements.
Talk about clever.
Pick a fight, run out the clock and then appeal to the shop that is all but boarded up by your hand.
It’s almost as though this has been the Trump administration’s plan all along.
It’s actually starting to make sense. Donald Trump has been consistently opposed to American trade policy saying it hollowed out the industrial heartland of the U.S. and killed manufacturing jobs.
In 2016, Rust Belt voters agreed with his tough-on-trade agenda and put him over the top. Trump won the White House by flipping three key Rust Belt states — Michigan, Pennsylvania and Wisconsin — that were expected to be a lock for Hillary Clinton.
Trump blamed trade agreements for moving jobs away from Americans in favour of jobs for workers in China, Mexico, Japan and other places around the world.
Since taking office, Trump has renegotiated NAFTA (which he called the “worst deal ever”), started a trade war with China (still ongoing) and imposed tariffs on other major U.S. trading partners including Japan, the EU and of course Canada and Mexico.
One message that always resonates with his voting base is that the U.S. trade deficit is directly due to bad trade agreements.
Fortunately for Trump, the numbers tend to make this point for him.
At the time of Donald Trump’s election, the U.S. global trade deficit in goods and services was $566 billion.
The trade deficit in goods, without services, was $810 billion. Looking at specific countries, the deficit once again shows why the Trump trade message resonates:
Trade deficit with China: $375 billion
Trade deficit with Mexico: $71 billion
Trade deficit with Japan: $69 billion
Trade deficit with Germany: $65 billion
Trade deficit with Canada: $18 billion
Faced with such large trade deficits, the Trump administration’s modus operandi has been to put America at the top of the list by enacting protectionist barriers and renegotiating deals that favour U.S. interests.
It has now taken it a step further by sidelining the WTO and rendering it all but useless in the global trading game.
Simply put, the Trump administration has thrown out the old rules, made up new ones and sent the umpire packing.
But things will go “back to normal” if Joe Biden wins right?
Polls consistently show that Americans approve of an trade protectionist agenda and some form of it will remain irrespective of who wins the White House in a few short weeks.
The Trump playbook on trade is here to stay.