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UC Irvine economist who never met Donald Trump is now a key advisor

He’s never met Donald Trump or talked with the Republican nominee on the phone.

Yet Peter Navarro, a 67-year-old UC Irvine professor who ran unsuccessfully four times for public office as a Democrat, is now one of the leading voices on Trump’s economic advisory team.

After Trump’s big economic speech in Detroit earlier this month, it was Navarro who launched the most public defense of Trumponomics, sparring with Hillary Clinton backers in a series of national news programs.

As the only academic and economics PhD (from Harvard University) on a team packed with wealthy businessmen, Navarro has proved to be adept at providing the statistics and economic theory to support Trump’s fulminations on America’s financial ills.  

Probably no one has applauded Trump’s anti-China rhetoric more enthusiastically than Navarro, who over the past decade has built a reputation as a tough, often acerbic critic of China policies. It was their mutual disdain for China’s behavior that initially bonded the two men.

Trump endorsed Navarro’s 2011 book, “Death by China,” and said of Navarro’s film version of the polemical work: “ ‘Death by China’ is right on. This important documentary depicts our problem with China with facts, figures and insight.”

Before China captivated him, Navarro’s expansive research and writings included energy policies, online education and personal finance. Should Trump win in November, Navarro could occupy an influential seat in the White House.

In an interview with The Times, Navarro answered questions over the phone and in writing. They have been edited for brevity.

You’re representing Trump on a lot of economic issues, but you’ve never so much as talked with him. Have you exchanged emails?

We’ve exchanged letters. I have no problem with that. It’s no big deal to me. Look, we’re in the middle of a campaign now. He needs to be talking to voters; he doesn’t necessarily need to be talking to me. I work with the team, and the team is in sync and it’s not an issue to me.

Did he ask you to join the team? Who asked you to join?

You know, I prefer to keep that confidential. Let’s just say I had a conversation with some of the folks on the top of the chain there, and I was more than happy to do it. I’ve been working for some weeks now, on a pro bono basis.

What was it about Trump that led you to become an ardent supporter of his?

Well, we share a common vision of what’s wrong with the American economy, and the key portion of that is the trade issue. The fundamental underlying structural problem is that the almost $800-billion trade deficit [$746 billion in 2015] is dragging down the GDP and coupled with that the business investment that’s going to Mexico and China.

You’ve had a versatile academic career. What happened that you began focusing on China?

The epiphany for me was when I began to notice in the early 2000s a lot of my fully employed [former] MBA students [at UCI business school] were becoming fully unemployed. And it was like, “What’s going on here?” And as I began to look more deeply into it, all roads led to Beijing.

You mean China is the core of America’s economic problems?

China is not the only reason growth has slowed, but it is a major reason. China continues to recklessly engage in unfair trade practices expressly prohibited by the WTO [World Trade Organization] — illegal export subsidies, intellectual property theft, forced technology transfer.  It also uses unfair trade practices like currency manipulation and the widespread use of sweatshop labor and pollution havens, for which the WTO provides no recourse for or relief.

Since China joined the WTO in 2001, over 70,000 American factories have closed, the average median household income has actually fallen and we now owe trillions of dollars to China. [Chinese holdings of U.S. Treasury and other securities were estimated at $1.8 trillion as of June 2015.] Fully half of our annual trade deficit in goods is with the biggest trade cheater on the planet. This is causality, not correlation.

Trump’s proposal for a 45% tariff on goods from China and 35% on Mexican goods: Was that your idea?

The numbers didn’t come from me. Trump had an intuitive grasp based on his experience as a businessman about what was the magnitude of these unfair trade practices. His intuition effectively met my analysis because in 2006 when I looked at it, I calculated that about 43% of the Chinese advantage was unfair trade practices.

Don’t you think a 45% tariff will cause a trade war?

[President] Reagan, let’s not forgot, is the one who put a 100% tariff on Japanese semiconductors. People [need to] clearly understand the difference between a free trader like Reagan and Trump, who imposes defensive tariffs on cheaters, versus protectionism like China does.

You don’t think a 45% across-the-board tariff on the Chinese goods is protectionism?

Tariffs are not the end game. Tariffs are a negotiating tool to get China to stop its massive cheating. If China wants access to the world’s largest market, it must play by the rules. Right now, China exploits the weakness of the White House as it continues to engage in its unfair trade practices. China will respect Donald Trump.

For all of Trump’s plainspoken ways that are popular with ordinary workers, many people — including prominent Republicans — have been put off by his sometimes outlandish remarks. Don’t you agree Trump should tame those kinds of comments?

Here’s the thing: Donald Trump got the most Republican votes in [primary] history as a presidential candidate, and he got that by speaking plainly to the American people. The last thing anybody wants to do is to stop him from doing that because that’s the beauty of the Trump campaign.

Clinton has proposed raising the federal minimum wage to $12 an hour. Would you lift the wage floor, and by how much?

The best way to lift people out of poverty and boost wages is to grow our GDP faster. While Trump is open to raising the minimum wage, the best approach is to grow faster.

Experts have described Trump’s tax plan as wildly unrealistic, that the tax cuts would lead to massive deficits.

They silo the tax plan, and they don’t allow for the synergies with the other parts of the package. To me it’s pathetic. They can model a tax plan until the cows come home, but they can’t incorporate the offsetting effects of energy, regulatory and trade policies that will stimulate GDP growth and additional revenues.

What about criticisms that Trump’s tax plan, like repealing the estate tax and the deduction for child care, would benefit the rich like Trump?

We’re going to be coming out with a very detailed tax plan. 

When?

Soon. So far, what’s been released is kind of a broad outline. The outline is a strong, sound outline. The outline basically has tax cuts to all Americans and additional benefits for people who aren’t taxpayers who are at the poverty level. The underlying philosophy is a supply-side Reagan philosophy that these tax cuts will help stimulate the economy far better than the kind of Keynesian tax-and-spend policies.

Trump is way down in the polls. What makes you think he is going to win? 

If you study how Ronald Reagan won first the 1980 election and then in 1984, what Reagan did is what Trump is going to do, and that is pull in a tremendous amount of blue-collar workers who have felt abandoned by the Democrats. The swing voters for Reagan were those disaffected, often union workers in manufacturing. That’s the same thing we’re going to see with Trump.

don.lee@latimes.com

Follow me at @dleelatimes

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