President Trump Has Authority to Rebuild American Industry: Use the Defense Production Act of 1950

Journal of Political Risk, Vol. 7, No. 3, March 2019

By William R. Hawkins

The USS Eisenhower at a dock to complete it’s overhaul, Newport News, Virginia. Ira Block/National Geographic/Getty Images

President Donald Trump’s trade reform campaign is not meant only to redress the massive deficit with the People’s Republic of China ($419 billion in goods last year, a net figure of how much American money is supporting jobs and production in China rather than at home). His policies have been rooted in national security concerns with a focus on the dangerous transfer of capital and technology that has empowered Beijing’s military buildup and aggressive behavior along the Pacific Rim and beyond. There is concern that the momentum of his efforts is slowing. He delayed elevating tariffs on Chinese goods from 10% to 25% on March 1st to give negotiations more time to reach a deal. But the PRC regime will never curb its pursuit of the wealth and capabilities it needs to replace the U.S. as the world’s preeminent power. It is a long-term economic contest between rivals for the highest of stakes imaginable.

President Trump and close advisors such as Peter Navarro, Director of the National Trade Council in the White House know this, but need to operate from a strong base. Congress cannot, however, add much to the campaign at present. It is so crippled by factions and sophistries as to have taken itself out of the game. But Congress has left a legacy from earlier, less anarchic times: the Defense Production Act. This core legislation, based on preserving the “Arsenal of Democracy” which won World War II, gives the President broad authority to revive, expand and maintain our domestic industrial base. The DPA was first enacted in 1950, but it is still alive and well, being reauthorized twice by President George W. Bush, amended in 2009 on a bipartisan basis, supported by a 2012 Executive Order issued by President Obama and reauthorized again in 2014.

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Tariff Benefits Will Exceed Costs When National Goals Are Met

Journal of Political Risk, Vol. 7, No. 3, March 2019 

By William R. Hawkins

US President Donald Trump, with US Congressman Sean Duffy (L), holds a tariff table as he speaks in the Cabinet Room of the White House on January 24, 2019. Trump spoke about the unfair trade practices of China. Credit: MANDEL NGAN/AFP/Getty

A discussion paper published last weekend by the Centre for Economic Policy Research in the UK claimed that the tariffs President Donald Trump has imposed on Chinese products are “causing the diversion of $165 billion a year in trade leading to significant costs for companies having to reorganize supply chains.” The paper was authored by Princeton and Federal Reserve economists, and calls this a “cost” on the U.S. economy. But the basis of their analysis is much too narrow. They do not understand that the “diversion” of trade is a sign that the President’s policy is working. We need to reduce the ties between American companies and an increasingly threatening China. And I have no sympathy if those who sought to profit by helping Beijing’s rise (even if “experts” told them it was a good thing for the world) now suffer transition costs. Trump’s actions were prompted by national security concerns.

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Wall Street Elites Against Democracy? A Case Study in Pro-China Media Bias

Press Reaction to the November 2018 speech by Dr. Peter Navarro, Director of the White House Office of Trade and Manufacturing Policy, was biased in a negative direction.

Journal of Political Risk, Vol. 7, No. 12, December 2018 

By Anders Corr, Ph.D.

U.S. President Donald Trump delivers remarks before signing ‘Section 232 Proclamations’ on steel and aluminum imports with (2nd L-R) Treasury Secretary Steven Mnuchin, Commerce Secretary Wilbur Ross, U.S. Trade Representative Robert Lighthizer and White House National Trade Council Director Peter Navarro in the Roosevelt Room of the White House on March 8, 2018 in Washington, DC. Trump signed proclamations that imposed a 25-percent tarriff on imported steel and a 10-percent tarriff on imported alumninum. (Photo by Chip Somodevilla/Getty Images)

Dr. Peter Navarro, Director of the White House Office of Trade and Manufacturing Policy, gave a speech on November 9 at the Center for Strategic and International Studies (CSIS) in Washington, D.C. The title of the speech was “Economic Security as National Security”, which Dr. Navarro, a Harvard-educated economist, argues is the maxim of the Trump Administration. After the speech, Dr. Navarro was attacked in the media, but not about his main points. The negative, and one might argue biased, coverage came from the Wall Street Journal, CNBC, the Atlantic, and Director of the National Economic Council, Larry Kudlow, among others. The negative response centered on Dr. Navarro’s controversial claim that Wall Street elites have undue influence on U.S. policy having to do with China.  Tempers were likely frayed at the time due to planning, negotiations and internal maneuvering in advance of a high stakes late November meeting then being planned between Presidents Trump and Xi Jinping at the G-20 meeting in Argentina. Worries were high that lack of progress on at least the outline of an agreement at the meeting could lead to deepening tariffs between the countries, and fears in the financial sector of falling stock markets or even a recession. But the bias and infighting of the attacks were unbecoming of these media outlets, and of Mr. Kudlow, the Director of the National Economic Council.

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