Donald Trump on Free Trade
2016 Republican nominee for President; 2000 Reform Primary Challenger for President
FACT-CHECK: One analysis of the Clinton-era North American Free Trade Agreement (NAFTA) found that about 851,700 U.S. jobs were displaced by the U.S. trade deficit with Mexico between 1993 (shortly before NAFTA was implemented) and 2014. That's a data point that was cited by Bernie Sanders during his 2016 campaign, when he frequently decried job losses due to NAFTA.
A 2014 study found that while NAFTA has caused about 203,000 jobs to be displaced by NAFTA-related imports annually, imports support 188,000 new jobs, leading to a net loss of only about 15,000 annually.
And the nonpartisan Congressional Research Service wrote in 2017 that "in reality, NAFTA did not cause the huge job losses feared by the critics... because trade with Canada & Mexico accounts for a small percentage of U.S. GDP."
We are now making it clear to China that after years of targeting our industries, and stealing our intellectual property, the theft of American jobs and wealth has come to an end.
Therefore, we recently imposed tariffs on $250 billion of Chinese goods--and now our Treasury is receiving billions of dollars a month from a country that never gave us a dime. But I don't blame China for taking advantage of us--I blame our leaders and representatives for allowing this travesty to happen. I have great respect for President Xi, and we are now working on a new trade deal with China. But it must include real, structural change to end unfair trade practices, reduce our chronic trade deficit, and protect American jobs.
Our new US-Mexico-Canada Agreement--or USMCA--will replace NAFTA and deliver for American workers: bringing back our manufacturing jobs, expanding American agriculture, and ensuring that more cars are proudly stamped with four beautiful words: made in the USA.
President Trump has shown no sign of stopping the use of tariffs as an economic weapon. Trump has been attempting to renegotiate the North American Free Trade Agreement (NAFTA) with Mexico and Canada. On Friday, Trump tweeted that a trade deal with Mexico was "coming along nicely," but threatened Canada with auto tariffs if Washington and Ottawa can't forge an agreement.
"When a car is sent to the United States from China, there is a Tariff to be paid of 2-1/2%. When a car is sent to China from the United States, there is a Tariff to be paid of 25%," Trump tweeted April 9. "Does that sound like free or fair trade. No, it sounds like STUPID TRADE-- going on for years!"
Trump's 25% figure matches up with international trade data: we rate this Mostly True. But economists raised some important details that Trump omitted: Some experts suggested Trump had cherry-picked the facts by singling out "cars" instead of a broader category of automobiles or car parts. The U.S. tariff on light trucks from China is 25%. And Chinese tariffs on American auto parts sent to China are well below 25%. For example, China places a 10% tariff on automobile engines.
"People have no idea how badly our country has been treated by other countries," Trump said. "They've destroyed the steel industry, they've destroyed the aluminum industry, and other industries, frankly."
Trump railed against the North American Free Trade Agreement and the nation's trading partners throughout his campaign. Speaking at the shuttered Osram Sylvania factory in Manchester NH in June 2016, he said, "New Hampshire has lost 31 percent of their manufacturing jobs since NAFTA," which went into effect in 1994, when Bill Clinton was president, Trump said. He called the creation of the World Trade Organization in 1995 "another Clinton disaster."
TRUMP: Because I did disagree with Ronald Reagan very strongly on trade. I disagreed with him. We should have been much tougher on trade even then. I've been waiting for years. Nobody does it right.
CLINTON: This is the way Donald thinks about himself, puts himself into the middle and says, "I alone can fix it," as he said on the convention stage.
TRUMP: Yeah, we've heard this before, Hillary. And frankly, now we're going to do it right.
Ford is moving production of the Ford Focus and Ford C-Max from its Michigan Assembly Plant in Wayne to Mexico in 2018. Ford said in April it plans to invest $1.6 billion to build a new plant in Mexico and create 2,800 jobs to build small cars there. However, Ford also plans to replace the products it makes in Wayne with two new vehicles and has repeatedly said no jobs will be lost. Ford's CEO said that "zero" jobs will be lost in the US and said "it is really unfortunate when politics get in the way of the facts."
Trumps' comments also prompted tweets from both Ford and the UAW countering Trump's claims. The automaker also made a commitment in November to invest $9 billion in U.S. plants and creates or retains more than 8,500 jobs as part of a new four-year contract with the UAW.
Bloomberg Fact check: NAFTA had a modest effect on manufacturing jobs. An Economic Policy Institute analysis says manufacturing jobs dropped in the 1990s from 17.9 million to 17.6 million.
Trump said of Hillary, "She's been doing this for 30 years. And why hasn't she made the agreements better? The NAFTA agreement is defective," [implying that Hillary and Bill Clinton held primary responsibility for NAFTA]. Chicago Tribune fact-checkers noted that while NAFTA was signed by former U.S. President Bill Clinton, it was largely negotiated under the administration of George H.W. Bush.
Never again, only the reverse--and I have to say this strongly--never again; only the reverse will happen. We will keep our jobs and bring in new ones. There will be consequences for the companies that leave the United States only to exploit it later. They fire the people. They take advantage of the United States. There will be consequences for those companies. Never again.
Let me explain why I say that. First on the economy. If Donald Trump's plans were ever implemented, the country would sink into prolonged recession. A few examples. His proposed 35 percent tariff-like penalties would instigate a trade war and that would raise prices for consumers, kill our export jobs and lead entrepreneurs and businesses of all stripes to flee America.
Now, not every policy that Donald Trump has floated is bad, of course. He wants to repeal and replace ObamaCare. He wants to bring jobs home from China and Japan. But his prescriptions to do those things are flimsy at best. Successfully bringing jobs home requires serious policy and reforms that make America the place businesses want to come, want to plant and want to grow. You can't punish business into doing what you want.
TRUMP: We have a trade deficit with Mexico of $58 billion a year. We're going to make them pay for that wall. The wall is $10 billion to $12 billion. I don't mind trade wars when we're losing $58 billion a year. Mexico is taking our businesses. They de-value their currencies to such an extent that our businesses cannot compete with them, our workers lose their jobs. You wouldn't know anything about it because you're a lousy businessman.
A: I think NAFTA has been a disaster. I think our current deals are a disaster. I'm a free trader. The problem with free trade is, you need smart people representing you. We have the greatest negotiators in the world, but we don't use them. We use political hacks and diplomats. We use the wrong people. Mexico is smart; they have out-negotiated us to a fare-thee-well. They're going to be the capital of automobiles pretty soon, the way they're going.
Free trade can be wonderful if you have smart people, but we have people that are stupid. We have people that are controlled by special interests. And it's just not going to work
Government needs to stop pick-pocketing your wallet. Every time it does, it slows growth and kills jobs. It's also immoral.
Why is our president signing the trade bill that the South Koreans want him to sign instead of the one that gives us maximum advantage?
Clinton: Well, that is just not accurate. I was against it once it was finally negotiated and the terms were laid out.
A U.S. Treasury spokesman confirmed that the Treasury Department's semi-annual report on currency practices of major trading partners, due out later this week, will not name China a currency manipulator. "They're not currency manipulators," Trump said about China. The statement is an about-face from Trump's election campaign promises to slap that label on Beijing on the first day of his administration as part of his plan to reduce Chinese imports into the United States.
The Wall Street Journal paraphrased Trump as saying that the reason he changed his mind on the currency issue was because China has not been manipulating its yuan for months and because taking the step now could jeopardize his talks with Beijing on confronting the threat from North Korea.
TRUMP: Energy is under siege by the Obama administration. The EPA, Environmental Protection Agency, is killing these energy companies. And you take a look at what's happening to steel and the cost of steel and China dumping vast amounts of steel all over the United States, which essentially is killing our steelworkers and our steel companies. It's an absolute disgrace.
CLINTON: First of all, China is illegally dumping steel in the United States and Donald Trump is buying it to build his buildings, putting steelworkers and American steel plants out of business. That's something that I fought against as a senator and that I would have a trade prosecutor to make sure that we don't get taken advantage of by China on steel or anything else.
KASICH: Trade has to be balanced & we have to make sure that when we see a violation, like some country dumping their products into this country, I will shut down those imports.
Q [to Trump]: Your campaign platform is inconsistent with how you run your businesses: your companies manufacture clothing in China and Mexico.
TRUMP: Because of the monetary devaluations that other countries are constantly doing and brilliantly doing against us, it's very, very hard for our companies in this country, in our country, to compete. So I will take advantage of it; they're the laws. But I'm the one that knows how to change it. Nobody else on this dais knows how to change it like I do, believe me.
KASICH: They can't manipulate their currency. That will not be anything that I would allow them to get away with. And if I saw them doing it, I would take immediate action and make sure that the American worker is protected.
TRUMP: The 45% tariff is a threat. It's not a tax, it was a threat. It will be a tax if they don't behave. Take China as an example. I have many friends, great manufacturers, they want to go into China. They can't. China won't let them. We talk about free trade. It's not tree free trade; it's stupid trade. China dumps everything that they have over here. No tax, no anything. We can't get into China. The best manufacturers, when they get in, they have to pay a tremendous tax. The 45% is a threat that if they don't behave, we will tax you. It doesn't have to be 45, it could be less. But it has to be something because our country & our trade & our deals and most importantly our jobs are going to hell.??
Q: Will you promise that you will move your clothing collection to the US, the clothes that are made in China and Mexico?
TRUMP: I will do that. And by the way, I have been doing it more and more. But they devalue their currencies, in particular China. Mexico is doing a big number now, also. Japan is unbelievable what they're doing. They devalue their currencies, and they make it impossible for clothing-makers in this country to do clothing in this country. The Trans-Pacific Partnership--which Marco is in favor of---they don't take into concurrence the devaluation. They're devaluing their currency.
RUBIO: The answer is, he's not going to do it. And you know why? The reason why he makes it in China or Mexico is because he can make more money on it.
TRUMP: The TPP is horrible deal. It is a deal that is going to lead to nothing but trouble. It's a deal that was designed for China to come in, as they always do, through the back door and totally take advantage of everyone. It's 5,600 pages long, so complex that nobody's read it. This is one of the worst trade deals. And I would, yes, rather not have it. We're losing now over $500 billion in terms of imbalance with China, $75 billion a year imbalance with Japan.
Q: Which are there particular parts of the deal that you think were badly negotiated?
TRUMP: Well, the currency manipulation they don't discuss in the agreement, which is a disaster. If you look at the way China in particular takes advantage of the US--it's through currency manipulation. It's not even discussed in the almost 6,000-page agreement.
Sen. Rand PAUL: Hey, you know, we might want to point out China is not part of this deal.
I know from my own experience that this is a difficult problem. The Chinese are very savvy businesspeople, and they have great advantages over our manufacturers. I've had several Trump-brand products made there.
Remember: The Chinese need us as much as we need them. Maybe even more.
We can't do anything right. Our military has to be strengthened. Our vets have to be taken care of. We have to end ObamaCare, and we have to make our country great again, and I will do that.
When did we beat Japan at anything? They send their cars over by the millions, and what do we do? When was the last time you saw a Chevrolet in Tokyo? It doesn't exist, folks. They beat us all the time.
When do we beat Mexico at the border? They're laughing at us, at our stupidity. And now they are beating us economically. They are not our friend, believe me. But they're killing us economically. The U.S. has become a dumping ground for everybody else's problems.
Onshoring has huge potential. That's why Congress need to pass Virginia Congressman Frank Wolf's bill called the "Bring Jobs Back to America Act" (H.R.516) to help expand the onshoring movement and get American jobs back where they belong--here in America.
"When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so... We are right now taking in $billions in Tariffs. MAKE AMERICA RICH AGAIN," Trump wrote in a December 2018 tweet.
Trump is misstating how tariffs work. Tariffs are a fee charged by the U.S. when a good is brought into the U.S. They're designed to make foreign made goods more expensive--thus boosting domestic producers--but that expense, charged to the importer, is typically passed down to American consumers.
We will work to fix bad trade deals and negotiate new ones. And we will protect American workers and American intellectual property, through strong enforcement of our trade rules.
"This is the policy that ensures no one gets left behind in America anymore--that we protect our industry from unfair competition, favor the products produced by our fellow citizens and make certain that when jobs open those jobs are given to American workers first," the White House said in a statement.
It was not immediately clear how much the administration could accomplish without cooperation from Congress. However, industry experts said Trump's executive order was a good first step to protecting the U.S. defense industrial base, and U.S. firms that do business with the federal government.
The president will also order a review of existing federal procurement policies. These are statutes and rules instituted over the decades that may bar foreign contractors from bidding for jobs, exclude certain raw materials from abroad, or mandate that international firms deliver projects at reduced prices relative to American firms in order to win contracts.
The administration will also review exceptions to these policies granted under free-trade agreements and the World Trade Organization. While these agreements are designed to give U.S. firms access to foreign governments' contracts in exchange for allowing firms from abroad to bid on federal projects, a senior administration official argued that U.S. bids are treated unfairly overseas.
I just met with officials and workers from a great American company, Harley-Davidson. I asked them how they are doing with international sales. They told me--without even complaining because they have been mistreated for so long that they have become used to it--that it is very hard to do business with other countries because they tax our goods at such a high rate. They said that in one case another country taxed their motorcycles at 100 percent.
They weren't even asking for change. But I am. I believe strongly in free trade but it also has to be FAIR TRADE. President Lincoln, warned that the "abandonment of the protective policy will produce want and ruin." Lincoln was right--and it is time we heeded his words.
One by one, the factories shuttered and left our shores, with not even a thought about the millions upon millions of American workers left behind. The wealth of our middle class has been redistributed across the entire world. But that is the past.
From this day forward, a new vision will govern our land. From this moment on, it's going to be America First. Every decision on trade, on taxes, on immigration, on foreign affairs, will be made to benefit American workers and American families. We must protect our borders from the ravages of other countries making our products, stealing our companies, and destroying our jobs. Protection will lead to great prosperity and strength.
Yes, for as far back as we have records: in his 2015 book, in his 2011 book, and in his 2000 book. Some sample excerpts:
When a company in Germany makes goods to sell at home, it has to pay the VAT. But if it makes them to sell in the US, it doesn't--the tax gets waived at the border. If a US company sells in Germany, it does have to pay the VAT. [The UC Irvine] interpretation is that] border adjustability turns the VAT into an "implicit export subsidy" for foreign companies and an "implicit tariff" on US exporters. This is just dead wrong. Everybody has to pay Germany's VAT when they're selling goods in Germany. Nobody has to pay Germany's VAT when they're selling goods outside of Germany.
You can't really blame Trump for this one: a guy with a PhD in economics fed this stuff to him.
We have to renegotiate our trade deals. They're taking our jobs, they're giving incentives, they're doing things that, frankly, we don't do. Let me give you the example of Mexico. They have a VAT tax. We're on a different system. When we sell into Mexico, there's a tax. When they sell in--automatic, 16 percent, approximately. When they sell into us, there's no tax. It's a defective agreement. It's been defective for a long time, many years, but the politicians haven't done anything about it. But in all fairness to Secretary Clinton, when she started talking about this, it was really very recently. She's been doing this for 30 years. And why hasn't she made the agreements better? The NAFTA agreement is defective. We owe $20 trillion. We cannot do it any longer.
TRUMP: I am all for free trade, but it's got to be fair. When Ford moves their massive plants to Mexico, we get nothing. I want them to stay in Michigan.
Q: But the American Enterprise Institute says, your Trump Collection clothing line, some of it is made in Mexico and China.
TRUMP: That's true. I want it to be made here.
Q: The point is you're doing just what Ford is--you're taking advantage of a global trading market.
TRUMP: I never dispute that. I just ordered 4,000 television sets from South Korea. I don't want to order them from South Korea. I don't think anybody makes television sets in the United States anymore. I talk about it all the time.˙We don't make anything anymore. Now you look at Boeing.˙Boeing's going over to China.˙They're going to build a massive plant because China's demanding it in order to order airplanes from Boeing.
And you say to yourself, "How does that help us? Where is that good"? It's not. So I would say, "Let me give you the bad news. Every car and every part manufactured in this plant that comes across the border, we're going to charge you a 35% tax, and that tax is going to be paid simultaneously with the transaction.
Now, if it's not me in the position, here's what's going to happen: They're going to get a call from the donors or from the lobbyist for Ford and say, "I take care of you, and you can't do that to Ford."
I'm using my own money. I'm not using the lobbyists. I'm not using donors. I don't care.
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