A president can do a lot of governing without Congress, especially when it comes to foreign affairs – as Donald Trump has spent the past 20 months demonstrating, Tony Keller writes.Kevin Lamarque/Reuters
Five weeks from now, after votes in the U.S. midterms are counted on the evening of Nov. 3, President Donald Trump is going to lose control of the House of Representatives. His Republican Party may also lose its majority in the Senate.
Will that bring a sharp reversal in his economic and trade policies? Don’t bet on it.
Unlike the Canadian political system, where the executive rises out of the legislature, and where a government without a working majority falls, the U.S. Constitution establishes no such connection. A president can do a lot of governing without Congress, especially when it comes to foreign affairs – as Mr. Trump has spent the last 20 months demonstrating.
He invaded Venezuela on his own say so. Ditto starting a war with Iran that is heading into its eighth month. And with the exception of a tariff measure that the courts declared beyond his authority, Mr. Trump has threatened and imposed import restrictions on the entire world, including Canada, and adjusted them up or down, without Congress.
Trumpenomics is less of a coherent economic philosophy than an expression of one man’s shifting impulses, desires and resentments. But like that man, the policy is real. And it’s not disappearing any time soon.
Until Mr. Trump’s term ends on Jan. 20, 2029, he retains the power to run trade policy, largely independent of Congress. He’s shown his willingness to push that power to its legal limits, and beyond.
If a future Democratic majority in Congress tries to restrain him, he has a presidential veto. In any case, keep in mind that the Democrats were, until five minutes ago, the party least enthusiastic with free trade. Their rhetorical disagreement with the consequences of Trump trade policy is total; their interest in rolling back all aspects of it will be somewhat less.
Beyond Washington, Mr. Trump’s threats and actions are knocking down what was a U.S.-centred global trading system. Once dominoes start toppling, it’s not easy to stop them. It’s even harder to stand them back up.
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Trumpenomics will be with us for a while. And its fallout will have a long half-life.
Trumpenomics is pre-Adam Smith economics. Instead of seeing trade as a mutually beneficial exchange that tends to promote peace among nations – a state of affairs the U.S. helped to foster after 1945 – it imagines trade as threat to be wielded, or subjected to.
Imports are generally bad in Trumpenomics, especially if they are manufactured goods, while exports are generally seen as good. Trade connections are also there to be weaponized, offering the larger partner the opportunity to extract benefits and compel obedience.
Mr. Trump’s head is stuck in the late 19th century, when his tariff hero, William McKinley, was president. Not only has international law changed since then (McKinley annexed Cuba, Puerto Rico and the Philippines), so has international trade.
Trade used to be mostly about the exchange of finished goods. But the world of today, the one that Trumpenomics is hostile to, is one where a good is likely to have been produced by supply chains snaking back and forth across borders. The North American auto industry, with interdependent operations featuring scores of suppliers and suppliers-to-suppliers, operating across multiple countries, is the most famous example.
To the extent that Trumpenomics disintegrates this world – and Mr. Trump and his minions regularly say that is their goal – that will harm the industries and companies within this ecosystem, including the North American auto industry. It will also harm Canada, since much of our economy is organized around integrated, border-crossing chains of production.
There is no stand-alone Canadian auto industry selling wholly Canadian cars. Instead, we export most of the vehicles we make, import most of the cars we buy, produce huge amounts of parts for installation in American-assembled cars and use imported parts in Canadian-assembled cars.
Other Canadian industries have similar stories. Steel. Aluminum. Aircraft.
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Bombardier assembles business jets in Canada. Nearly all of its customers are outside of Canada. But as the Trump administration discovered after it threatened to ban the sale of Bombardier aircraft in the U.S., the company’s supply chain includes a huge roster of suppliers in the U.S., and beyond.
Trust in free trade and border-crossing supply chains – which artery will be severed tomorrow? – is what the Trump administration has been deliberately undermining. It has also refused to build a coalition against the common threat from China, and is instead focused on trying to take a bite out of erstwhile allies.
All of which puts Canada in a difficult position.
This country benefits from free trade with like-minded partners, and our manufacturers benefit from the efficiency gains of being able to buy and sell outside our borders.
But if our main partner in this venture wants to throw up barriers to this kind of mutually beneficial integration, we’re left with no choice but to engage in some targeted protectionism of our own.
When trust is high, everyone can afford to take walls down. When trust falls and walls go up, you must build them, too.
That’s the main result of Trumpenomics. It will outlive its author.