Bill Black: Trump Sees Europe as a “Foe” Because of Key Misinformed Advisor
President Trump’s belief that the European Union’s trade policies are more unfair towards the United States than just about any other trading partner is woefully misinformed and the result of his reliance “nutcase” trade advisor Peter Navarro, says economist Bill Black
GREG WILPERT: It’s The Real News Network and I’m Greg Wilpert. The fallout from President Trump’s Helsinki meeting with Russia’s President Putin continues. One of the more controversial and perhaps even odd statements that President Trump made during his trip to Europe, before he met with Putin, was to call the European Union a foe. Here’s what he had to say in a CBS interview from his golf club in Scotland.
JEFF GLOR: Who’s your biggest competitor, the biggest foe globally right now?
DONALD TRUMP: Well, I think we have a lot of foes. I think the European Union is a foe, what they do to us in trade. Now, you wouldn’t think of the European Union, but they’re a foe. Russia is a foe in certain respects. China is a foe of economically certainly they’re a foe. But that doesn’t mean they’re bad. It doesn’t mean anything. It means that they’re competitors. They want to do well and we want to do well.
GREG WILPERT: What raised eyebrows is that Trump clearly placed a long-time ally, the European Union, on the same level as traditional rivals such as China and Russia. Aside from Trump’s apparent ignorance of history, is there any merit to making such an equivalency at the current moment? Joining me to discuss this question is Bill Black. Bill is a white collar criminologist, former financial regulator and Associate Professor of Economics and Law at the University of Missouri, Kansas City. He is also the author of the book, The Best Way to Rob a Bank Is to Own One. Thanks for joining us again, Bill.
BILL BLACK: Thanks for having me.
GREG WILPERT: So, I don’t think that Trump was referring to the history of U.S. relations with Europe, Russia or China when he called all of them foes in the sense of competitors. But do you think this kind of equivalency, of rivalry between the dominant powers, has any merit in reference to the current moment?
BILL BLACK: It doesn’t have any merits on any level you can think of, politics, law or economics. The president follows the advice of a singular economist, and I mean literally that. There is one economist in the world that thinks that what Trump is doing and deliberately creating a trade war is an intelligent exercise. And Trump, in addition to his usual problems with the facts, has actually stated that when he was talking with Trudeau and Trudeau pointed out correctly that the United States ran a trade surplus with Canada, Trump says, “Well, I just said no, no we don’t, you’re absolutely wrong.” And then he said, “I didn’t know the facts.”
And now we have slapped tariffs on Canada, our largest single trading partner, on the grounds that it is a national security threat to the United States of America. And he has now used the phrase that “One of our biggest foes in the world is the European Union.” Now, we export annually to the European Union right around a half trillion dollars in goods. They export to us goods and services. They export to us a bit more, but in the range of six hundred billion. So, in absolute terms that’s a modest to moderate trade deficit. As a percentage it’s quite small, it’s enormously smaller, by the way, in percentage terms than either Russia or China.
And of course, he’s now famous for cozying up to Russia, which is one of the entities that has the most unfair tariff systems and what we call nontariff barriers in the world, that is expressly designed in many cases to harm U.S. interests. Plus of course, there’s the overlay of sanctions, U.S. economic sanctions, that have restricted in particular U.S. oil companies, most particularly Exxon from coming in. And we had the whole thing with our former Secretary from Exxon, who also wanted to be very friendly to the Russians with the sole idea of removing sanctions from Exxon so that it could produce more revenue for Putin.
GREG WILPERT: So, tell us a little bit more about who is actually behind this. You said that there is only one person, really, who is advising Trump on this. Who is this, and what’s the interest behind that, why spoil this relationship with the European Union with these tarrifs, and at the same time, try to curry favor with Russia? I know we have all kinds of theories about that, but I just want to see your take on it.
BILL BLACK: So, the economist behind this is Peter Navarro of the University of California at Irvine. And he was there when I was doing my graduate work at UC Irvine, and he is a nutcase and there’s no other economist in the world that agrees with him. He’s not necessarily in the pro-Putin orbit, he’s in the anti-everybody-else-in-the-world orbit, and sees unfair trade barriers everywhere. There are some unfair trade barriers, and every country has them, including the United States. Compared to history, we live in a time period the last thirty years in which trade barriers are dramatically reduced and are dramatically less discriminatory. And of course, Navarro’s craziness is that we should actually deliberately institute a trade war.
You know, this was done before of course in the lead-up to the Great Depression, the Smoot-Hawley round of tariffs in the United States as part of that trade war. And so, it doesn’t matter what brand of economics you study, and everywhere from super right-wing to super left-wing, trade wars are really, really, really negative sum games. In other words, the losses collectively are worse than anybody’s gain. So, it’s like destroying wealth. And people who are familiar with the history of the United States will recall that we didn’t begin under the U.S. Constitution, we began under the Articles of Confederation. And one of the things the Articles of Confederation allowed was each state to slap tariffs on the other states’ goods, which they did with great glee to try to protect the local businesses. And the result was, it really screwed up trade in the United States.
So, one of the important things- reasons the U.S. Constitution was adopted in a different system, was to allow freer trade within the United States. And of course, that was central to the ability of the United States to grow rapidly. Now, none of that says in international trade that there aren’t losers and that you shouldn’t have programs, of course, to help those people with income and help them with retraining and such. And the United States assuredly- you know, anti-governmental fixations of laissez-faire has done a poor job of that. But the Trump administration isn’t helping there, it’s just going back to good, old-fashioned trade war and lies about the world.
GREG WILPERT: I think there’s a lot of confusion, though, perhaps. And correct me if I’m wrong, but between advocating for complete free trade, which has often been done, especially under the previous administrations in the United States, and on the other hand, being in favor of a trade war- it’s not exactly the same thing to try to- I just wanted to get your take on what’s the difference, basically, between a trade war and instituting various forms of protectionism in order to protect particular industries in a targeted manner? I’m just wondering if you could say a couple words about that distinction, perhaps.
BILL BLACK: Well sometimes there’s a distinction, sometimes there aren’t. If they’re smart, of course they call every trade war an effort to protect industries, but this one hasn’t been created on that basis. In other words, Trump didn’t look and see what industries are currently being hurt, that if we allowed them to develop, we could create this broader network of key infrastructure companies and, say, we could bring much of the production of Apple products back to the United States. Apple products are overwhelmingly constructed in China, for example, and we no longer even have the companies that could produce most of the components in the United States.
So, you could have a system that you said, “Hey, we want to create the ability to compete and we’re going to, for a limited time period, say twenty years, protect our industries and maybe even will subsidize the creation of rival infrastructures that would allow us to be involved in the production of small consumer electronic goods.” All right, that could be a rational policy. Most economists would hate it, but you could argue for it. That has nothing to do with what Trump has done. Trump isn’t based on facts, he isn’t based on any system of the government actually supporting the development of entrepreneurial capital. He isn’t for training huge numbers of new engineers in the United States, which you would need as part of that strategy.
This is not helping, protecting. This is let’s hurt other people. Because we’re just going to say that if Germany is exporting more cars to us, then that hurts us. A, It doesn’t, but B, you know, okay. But of course, many of those cars and trucks are produced in the United States, particularly cars in the case of Germany, and it produces U.S. jobs. That would be another example of maybe an appropriate protectionist policy as some economists, not most, would say. Okay, let’s create incentives, not necessarily to try to drive Germany out of producing cars, but have them produce cars for the U.S. market in the United States.
But again, that is not what these Trump policies are aimed at, at all. It is under this incredibly false and primitive view that if anybody is exporting goods to us, they must be doing something evil, as opposed to producing good products that we like, which is of course overwhelming the story- overwhelmingly, the true story of why we buy goods from other countries just like we buy goods from South Carolina, North Carolina and such. And nobody thinks of it as, “Those dirty people in the Research Triangle, how dare they educate engineers and scientists and produce goods that we buy elsewhere in the United States?” That would be insane. Well, it’s pretty much insane in the international context, as well.
GREG WILPERT: Okay. Well, we’re going to have to leave it there. I was speaking to Bill Black, Associate Professor of Economics and Law at the University of Missouri, Kansas City. Thanks, Bill, for having joined us again.
BILL BLACK: Thank you.
GREG WILPERT: And thank you for joining The Real News Network. I’d like to remind you, we are in the midst of our summer fundraiser and need your help to reach our goal of raising two hundred thousand dollars. Every dollar that you donate will be matched, and unlike practically all other news outlets, we do not accept support from governments or corporations. Please do what you can today.