By Tank Murdoch
(TNS) Former President Obama jeered at and mocked then-GOP presidential nominee Donald Trump’s pledge to negotiate better trade deals with our allies and near-peer competitors.
During a PBS-sponsored town hall in June 2016 that Obama, for some reason, thought he needed to do (it was his last year in office), he made his now-infamous “magic wand” comment about his soon-to-be-successor’s pledge to bring lost jobs back to the United States.
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â€œWell, how exactly are you going to do that? What exactly are you going to do? Thereâ€™s no answer to it,” Obama said.
“He just says, ‘Well, Iâ€™m going to negotiate a better deal.’ Well, what, how exactly are you going to negotiate that? What magic wand do you have? And usually the answer is, he doesnâ€™t have an answer.â€
Other Democrats and Never-Trumpers similarly mocked the ‘rube’ GOP candidate, Mr. Never Been In Politics, as too naive at best and completely off his rocker at worse.
Fast forward to March 2020.
According to this timeline, the president’s team has made a series of trade deals based on his “America first” agenda with Japan, South Korea, and the EU; a deal with Britain is being negotiated, as is a larger deal with the EU; NAFTA is now the USMCA; and lo and behold, we have “Phase One” of a trade deal with China, the latter of whichÂ no oneÂ thought was possible.
All of these were Trump campaign promises, but importantly, the president is laser-focused on China and this week, the realization of just how right President Trump has been to rebalance U.S.-China trade in a way that not only increases American exports but also brings home American jobs has hit home.
The Wall Street Journal notes that thanks to coronavirus, China’s economic and manufacturing output have not tanked but have been severely decreased. That’s having a global effect, as we’ve seen with a 12.4 percent drop on Wall Street this past week, the largest since the 2008 Great Recession.
The paper notes:
Chinaâ€™s coronavirus epidemicÂ is depressing its economic outlook, with new government readings on the manufacturing and service sectors validating informal indications that the country is struggling to get back to work.
A Chinese government indexÂ that tracks sentiment among purchasing managers at manufacturers fell to its lowest level on record in February, dropping deep into territory that indicates a contraction. Chinaâ€™s National Bureau of Statistics said Saturday that its 15-year-old index tumbled to 35.7 from 50.0 in Januaryâ€”below even the lowest level recorded during the global financial crisis.
A related index that tracks purchasing plans in services industries plunged to a record low of 29.6â€”deep below the 50 mark that separates expansion from contractionâ€”suggesting weakness in construction, transportation, restaurants and tourism.
The reports are the first official economic checkpoints to be released during the crisis. They confirm a freeze that dates to late January, when authorities signaled the disease, now called Covid-19, was spreading faster than they thought. They then clamped down on countrywide transportation and business activity. …
The disease and Chinaâ€™s response hammered both production and demand, said Zhang Liqun, an analyst with a government-linked business organization, the China Federation of Logistics & Purchasing.
The statistics bureau, which releases the index together with the federation, predicted there would be some rebound next month as more manufacturers resume activity; authorities say the worst of the health crisis may have passed.
The fate of Chinaâ€™s economy is of crucial importance to a world with few solid drivers of growth. The countryâ€™s gross domestic product dipped to a three-decade low of 6.1% last year, yet that was stillÂ enough to powerÂ about 40% of the worldâ€™s economic expansion, according to the Organization for Economic Co-operation and Development.
These last two statistics are important to place in context. Though China’s GDP fell to its lowest level — 6.1 percent — in 30 years, that’s still roughly double what U.S. GDP has been even in Trump’s economic revival.
Also, though China’s GDP took a hit, the No. 2 economy in the worldÂ stillÂ fueledÂ 40 percent ofÂ global growth.
Here’s the thing. Every consumer item has to be made byÂ someone. Over the past three decades, thanks to U.S. and European trade policies that favored Chinese expansionism, much of the world’s production is now centered in one place: China.
That’s fine and dandy when everything is normal and there aren’t any disruptions to Chinese society. But when there is, look at what happens: Global markets tank on fears of, and actual, production slowdowns and work stoppages. Because the world gets its goods from China.
Understand that the FDA has identified a major shortage of basic protective gear against viral spread like face masks, but there are just a couple of plants in the U.S. where they are made. AndÂ they couldn’t ramp up to full production even if ordered by the government because our plants get the bulk ofÂ their supplies from … China.
Again, consumer goods have to be made by someone. That’s always going to be the case. One of Trump’s trade objectives is to bring back more manufacturing capability to the United States a) soÂ our people can have better jobs; and b) so we’re as reliant on one country who may someday become an enemy forÂ our economic lifeblood.
By all accounts, while the process is slow, the president’s strategies are working.
“In Trumpâ€™s first three years, more than seven million full-time jobs have been added. To put that into perspective, only 2.45 million jobs were gained from 2007 â€“ the height of employment under the Bush administration â€“ to the end of the Obama era in early 2017,” writes Justin Haskins, the editorial director and a research fellow at The Heartland Institute,Â in The Hill.
“Since January 2017, more than 480,000 manufacturing jobsÂ have been addedÂ to the U.S. economy, following two decades of sharp losses,” he noted further, adding that in President Clinton’s final three years in office –Â after he signed the NAFTA trade ‘deal’ in 1994 — the U.S. lost 430,000 manufacturing jobs.
About 300,000 more were lost under Obama.
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American economic and wealth generation cannot be so dependent on another country that the mere outbreak of a virus that doesn’t even come close to the mortality rate of U.S. influenza can tank our stock market and hurt our people financially. Trump has known this all along, which is why he’s been so adamant about righting past trade wrongs with China.
Once again, the president’s instincts and market knowledge far surpass those of the political guru class in D.C.
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