President-elect Donald Trump, signaling that he intends to follow through on his tough talk on trade, is establishing a new White House-based trade council to be headed by a vehement critic of China’s economic policies.
Trump on Wednesday named Peter Navarro, a Harvard-trained business professor at UC Irvine, as director of trade and industrial policy and the head of the newly created White House National Trade Council.
The move sends a strong message: The Trump administration will take a much more aggressive posture to shrink the nation’s large trade deficit and combat what the president-elect and Navarro believe are forces behind America’s manufacturing woes — unfair and mercantilist practices on the part of China and other trading partners. In his campaign Trump threatened to slap a 45% tariff on all Chinese imports.
But conservative and liberal economists alike questioned the value of forming another agency in the White House to deal with the harmful effects of trade and globalization, core elements of Trump’s economic platform.
The government already has an entire agency devoted to trade negotiations, the U.S. Trade Representative, whose offices are less than a block from the White House, as well as two Cabinet departments and two other White House offices with a hand in trade policy.
Trump’s transition team has indicated that Wilbur Ross, his pick for Commerce secretary, was likely to lead the charge on trade. Traditionally, trade policy has been largely the purview of the Trade Representative, for which Trump has not selected a nominee. The Treasury Department has the role of scrutinizing foreign currency practices, a hot issue in trade — especially involving China. Then there are the two White House economic groups, the National Economic Council and the Council of Economic Advisors.
“I hate the notion of another bureaucracy and another example where the White House is trying to do everything itself,” said Derek Scissors, a resident scholar and China expert at the American Enterprise Institute, a conservative think tank.
“It is hard to get things done across the government, and you just created another group to sit at the table and have its own interests.”
Trump’s team, in announcing the new trade office, did not spell out how it would relate to the other agencies. But their statement described the mission of the trade council as advising the president and carrying out initiatives such as the Buy America, Hire America program.
Navarro, 67, was one of Trump’s early supporters and served as an economic advisor during the campaign, co-writing with Ross the white paper on Trump’s economic plan on trade, regulatory and energy policies.
Over the last decade, Navarro has come to be known for casting a harsh spotlight on Chinese economics and politics. He is the author “Death by China: Confronting the Dragon — a Global Call to Action.”
Although Navarro first met Trump during the campaign this summer, Trump endorsed Navarro’s 2011 book as well as the film version of his polemical work.
“I read one of Peter’s books on America’s trade problems years ago and was impressed by the clarity of his arguments and thoroughness of his research,” Trump said Wednesday in the statement announcing the appointment. “He will fulfill an essential role in my administration as a trade advisor.”
Clyde Prestowitz, a former top trade negotiator in the Reagan administration who knows Navarro and his works, said his selection “is a strong signal from Trump that he definitely wants to see a different trade policy.” Prestowitz, like a growing number of other trade analysts, has challenged the view that free trade is always a win-win deal.
“He’s a logical guy for Trump to put on the job. Give the guy a chance,” said Prestowitz.
Critics of China’s economic policies have accused Beijing of manipulating the exchange rate of its currency to gain an edge in trade as well as subsidizing Chinese firms, stealing intellectual property and erecting barriers for American and other foreign companies doing business in China.
On Wednesday, the Obama administration, through the Trade Representative’s office, issued an annual list of prominent markets “notorious” for counterfeit products and services. The list included Taobao.com, an online marketplace operated by Alibaba Group, which the trade office said was among the 15 most popular websites globally.
Alibaba Group’s president, Michael Evans, said he was disappointed by the decision and said it “leads us to question whether the USTR acted based on the actual facts or was influenced by the current political climate.”
Trump has cited China’s policies as a major source of America’s huge trade deficit. The accusation found particular resonance during the campaign in the industrial Midwest and other manufacturing centers in the U.S., which helped Trump get elected.
But other economists expressed reservations about Navarro and his positions. Jared Bernstein, former chief economic advisor to Vice President Joe Biden, credited Navarro for “his elevation of the downside of trade [which] brought an important reality missing in the campaign.”
But “his policy ideas seemed uniformly misguided,” Bernstein said. “His obsession with China seems out of step with what’s going on in international economics.”
Robert Atkinson, president of the Information Technology and Innovation Foundation, said he had mixed reactions to the new trade council and Navarro’s appointment.
“We’re big critics of the Washington trade consensus,” Atkinson said of the notion that free trade and globalization are unreservedly good. “At the same time, at what point do you start having the U.S. behave like other countries,” he said, concerned about Trump’s threats for high tariffs and protectionism.
Separately, Trump also is naming one of the nation’s richest men to be a special advisor on issues regarding regulatory reform.
Carl Icahn, a veteran of Wall Street who founded his own securities firm, will serve as an outside advisor, Trump said. He will not have a government position or receive a salary. As a result, he will not have to comply with government conflict-of-interest rules the way he would if he had a formal appointment.
Icahn, an early Trump supporter, is estimated to be worth more than $16 billion. Trump said a statement that the 80-year-old Icahn, one of the nation’s leading investors, is “not only a brilliant negotiator, but also someone who is innately able to predict the future, especially having to do with finances and economies.”
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