EDITORIAL: White House trade posturing slowing the Trump economy
As the latest installment of the Trump soap opera grips the Beltway and the media resistance — this episode involving beleaguered Baltimore — it’s worth noting that the president is coming off a pretty good week.
On Friday, the U.S. Supreme Court allowed the administration to move forward with plans to use $2.5 billion in military funds to build a wall spanning 100 miles of the U.S.-Mexico border, one of the president’s most high-profile campaign promises. That came on the heels of a budget deal — however faulty — that will at least allow Mr. Trump to avoid the bad optics of a government shutdown. Then there was the utter debacle of the Robert Mueller hearings that House leftists thought would grease the wheels for the president’s impeachment.
Finally, a New York Times analysis noted that Democrats — by rushing further left than Marx and Mao — have done little to make inroads in swing states such as Wisconsin, Florida and Michigan that were crucial to Mr. Trump’s victory in 2016.
“I think Trump looks as well-positioned for his re-election as he ever has,” GOP strategist Alex Conant told The Wall Street Journal.
And yet … storm clouds loom, particularly when it comes to the president’s signature achievement, the economy.
GDP growth dropped to 2.1 percent in the second quarter, down from 3.1 percent for the first three months of 2019. The Commerce Department also reported last week that revised numbers for 2018 show the economy grew at 2.5 percent in 2018, significantly lower than originally reported. While the growth rate is higher than many of Mr. Trump’s critics predicted and generally exceeds the performance of the Barack Obama economy, particularly during his latter tenure, it remains below the 3 percent threshold the president guaranteed on the campaign trail. Absent improvement, that will cloud Mr. Trump’s effort leading up to the election to tout his economic achievements.
The wound, unfortunately, is self-inflicted. The president has made great strides through tax reform and regulatory relief toward fostering a thriving business climate for job creators and entrepreneurs. Unemployment remains at historic lows — particularly for minority workers — and workforce participation has increased. But Mr. Trump’s insistence on threatening trade wars undermines those successes.
Many economists tie the slower growth to a lack of business investment — with the president potentially cutting off foreign markets, from Europe to Mexico to China, it’s unsurprising that corporate titans prefer caution. An administration team will meet this week in China for trade talks. If Mr. Trump hopes to deliver on his 3 percent growth target, he’ll make cutting deals with our trade partners a priority over his Twitter account. The alternative is to erode the advantage he currently enjoys over his Democratic opponents on the economy.