With the selection of Peter Navarro, a harsh critic of China, as the head of the White House National Trade Council, some economic and geopolitical analysts are alarmed over the potential for a U.S. trade war with China. Navarro, a professor of economics and public policy at the University of California, Irvine, was selected to direct the activities of the newly-created council which will advise President-elect Donald Trump on trade issues. The 67-year-old Navarro was one of the most vocal on Trump’s economic advisory team, despite having four unsuccessful tries for public office in California as a Democrat.
Navarro, who holds a Ph.D. in economics from Harvard University, has written a number of books critical of China, and has directed a documentary called Death By China: How America Lost Its Manufacturing Base, parts of which I watched on YouTube. His last three books were The Coming China Wars, Crouching Tiger: What China’s Militarism Means for the World, and Death by China, which I read a few years back after it was published in 2011. From what I remember, the facts were mostly correct but I was struck by the acerbic tone and one-sided arguments.
President-elect Donald Trump also read one of his books years ago, and commented on the book’s documentary saying “ ‘Death by China’ is right on. This important documentary depicts our problem with China with facts, figures and insight. I urge you to see it.” Trump has also declared he “was impressed by the clarity of his arguments and thoroughness of his research,” and believes Navarro “has presciently documented the harms inflicted by globalism on American workers, and laid out a path forward to restore our middle class.” Indeed, Navarro seems a logical pick for the president-elect, who has threatened to impose punitive tariffs of up to 45% on imported goods from China for unfair trade practices.
Navarro considers Beijing to be a currency manipulator and an unfair trade partner, and claims, “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.”
But if we look into that statement more deeply, it seems difficult to reconcile fully employed MBA students losing their jobs with lower-wage manufacturing jobs shifting to China. MBA students typically command higher-level management positions less susceptible to attrition, and many of those MBAs on Wall Street who lost their jobs during that decade cannot complain their jobs in finance relocated to Shanghai.
Trump’s top economic cheerleader also has a ways to go in explaining how the next president will “bring American jobs and factories home” from the “planet’s most efficient assassin”, which can “pick off American industries, job by job.” Many of these jobs have not been lost to foreign competitors like China and Mexico, but to automation, according to one study last year by Ball State University’s Center for Business and Economic Research. The study revealed that trade accounted for just 13% of America’s lost factory jobs, with some 88% of lost jobs taken by robots and other homegrown factors. Whether or or not Trump and Navarro can reverse this dependence on robotics and automation will prove to be one of their major challenges.