The Revenge of Norma Rae? The Unknowns of Trump’s Trade Policy

Wednesday, December 28, 2016


Late on election day for the next American president, I watched television and read newspaper reports like millions of other Americans in shock at the victory of Donald Trump and the defeat of Hillary Clinton. Virtually all news outlets had predicted a win for Clinton; instead, Trump claimed a dramatic triumph. Why did so many news organizations and pollsters misread the American public?

The answer lies in a fictionalized movie character and a Hollywood movie released around 1980. “Norma Rae” was a story of a real-life textile worker (of a different name) who rallied her fellow textile workers to demand better pay and working conditions at an American textile mill.

The character of Norma Rae won the fight against the factory owners. But, unfortunately for her and so many other textile workers, over time they lost the war. Ironically, at about 1980, the American textile industry came under the onslaught of new competition from overseas. It was the dawn of globalization and the American textile industry, despite its best effort to compete over the ensuing decade or so, became a serious casualty of a changing world.

Indeed, as globalization took hold, thousands of American companies closed. And along with the shuttering of so many businesses, hundreds of thousands of their workers lost their jobs only to be thrown into a rapidly changing country that no longer desired their skills. In time, these workers, along with hundreds of thousands of other laborers from other manufacturing industries, became a neglected mass of people. Numbering in the millions, such workers, and their families became the displaced inhabitants of the “Rust Belt” and abandoned Southern textile towns.



No wonder the American media overlooked them – they often lived in places many Americans ignored, forgotten towns and cities in the Midwest and South from another time and detached from the shiny new tech and financial services industries of the East and West Coasts. But these people are no longer overlooked. Norma Rae has had her revenge: the working class in America just elected Donald Trump as the country’s president.

What have these people gotten with Trump? Despite all of the press coverage concerning his bigotry and insensitivity, it hasn’t been clear how he would help the working class people who elected him. Build a wall along the U.S.-Mexico border? How would that help? It’s not clear. And that goes so many of Trump’s purported policies – for his supporters, the sound bites resonate, but how would they be enacted? That’s far less clear.

Ironically, Norma Rae voters were typically in the opposition party’s camp, staunch Democrats. But with today’s voting, it now seems that traditional political alignments do not stand any longer. Indeed, so many of these voters are now solidly Republican. However, there is more to the story of the rise of Trump. He’s not a Republican, at least in the traditional sense. For sure, he’s not a Democrat. But he seems to be something new in contemporary politics – a Populist, a person with appeal across a broad range of voters cutting across traditional party lines.

Simply put: Trump isn't beholden to any ideology and wants to be free of entanglements. Traditional Republicans should not make the mistake that his election is not something about which to be happy. He may prove to be uncontrollable. Although his is a creation of antagonistic conservative politics, conservatives need to be cautious because although their party may have won the election, they may have elected someone who will flaunt party orthodoxy and ideology -- beginning with support of free trade.

Beyond the posturing of the campaign, Trump will now have to govern -- which means he’ll have to make policy and establish goals and objectives. A high priority for him will be the health of the American economy and the uneven nature of prosperity in today’s world. What will he do to help all of those working class people left behind by globalization?

He will be under pressure to deliver some big, front page news during the opening months of office. One possibility is that he pulls the U.S. out of the WTO: he’d wreck the global economic order but would free himself to trash so many of the trade agreements he criticized during the election. And, of course, he could take on China in a trade war. That would shake things up and make his supporters happy.

Although many of his followers would like to turn the WTO into the League of Nations, I somehow feel that would be too radical even for Trump. Instead, I think he’ll take a different approach. First, he’ll let TPP just wither on the vine. It's pretty easy to kill TPP by doing nothing; Congress hasn't voted on it yet. Next, he may activate the escape clause in NAFTA, which gives signatories a six-month window to exit the agreement. During that time, he could use an exit for political gain in the media – imagine the headlines about the US pulling out of NAFTA – but in reality, he could use the time to renegotiate portions of the agreement.

And then there’s T-TIP. Personally, I’m going to keep a close eye on relations between the White House and 10 Downing Street. The commonalities between the forces supporting Brexit and Trump are all too similar. Why negotiate with all of the EU, when it may be more politically expedient for Trump to negotiate a separate economic-trade deal with Theresa May?  I wonder about this when I consider Trump’s positions concerning the role of Europe in its defense. He says he doesn’t want the U.S. to pay for Europe’s defense anymore. The same goes for Asia: why enter into broad economic alliances such as TPP, when smaller, more tactical agreements may be more politically expedient.

But who knows? And that’s the essential point about Donald Trump. We just won’t know what he will favor on the economy and global relations, let alone trade. During the campaign, he said so many contradictory things, it 's hard for anyone to discern what he will do once he enters office. Of course, many are fearful about his bigotry, building walls with Mexico, and pulling America back from the world stage, while many others feel those things were merely blustering to get elected. Time will tell.

I'm brought back to Norma Rae. In the broad scheme of globalization, governments traded off industries in an attempt to build opportunities for newer industries, with a promise of higher standards of living for their peoples. The textile and apparel industry has been traded off for broader geopolitical goals before. Just look at textiles. The developed world thought that by giving away textiles as part of a WTO deal (abolishment of the MFA quota system), they would open markets for financial and technology services in the developed world. In the aftermath of the Great Recession, that strategy looks questionable.

Some say that Trump will try to roll the clock of globalization back in time. I am skeptical that he’ll succeed, assuming that’s his goal. But I am confident that he will attempt to alter the global hierarchy. One way of changing the system will be to focus on trade. He can make tactical adjustments to trade policy that will not only give him the front-page news he craves but will enact the kind of systemic change upon which he ran for president.

Anyone up for a trade war with China?

Originally published on Just-Style.com, November 15, 2016.
  

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