Tuesday, June 18, 2019
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Why Trump has so many supporters for his trade war

WashingtonLarry Kudlow, economic advisor to Donald Trump, is 71 years old. But if he is to praise the advantages of the US in front of hundreds of potential investors, he comes to the emergency limping. This week, Kudlow appeared on the stage of the Washington Hilton hotel, propped up on a cane.

"I'm not a robot," he joked, but two weeks ago he had to have surgery on his left hip. "The older you get, the longer it takes to heal." For a long time, Kudlow did not keep up with his health, instead firing off one promotional salvo at a time for the US site.

"We're open to business, your business," he shouted at the Select USA summit, a US government networking event where US officials gather with overseas entrepreneurs. Tax cuts and broad deregulation, all that continues to fuel the US economy, enthused Kudlow.

He dismissed the raging trade conflict that had been raging for more than a year. "Look at it like that," he said, "when you invest with us, you do not have to worry about trade talks and tariffs. Come to the US, it's fun! "

The full room at the investor summit showed that the US has not had to worry about lack of investor interest so far – even though investments from China, against which the US is passing a punitive round after the next, have declined.

The bottom line is that the US is still the world's largest recipient of foreign direct investment, with fresh data expected in late July. Experts warn, however, Trump's trade war could not only punctually, but cause damage nationwide. But that should hardly matter at the conference.

Presidential daughter Ivanka Trump was allowed to speak on the stage for half an hour about the job market. "The reason why this hall is full is that the President has fulfilled his promises," she said. "We have growth, low taxes, deregulation, low unemployment." She was not interviewed by an independent expert, but by Trump's Secretary of Commerce Wilbur Ross, who gave her keywords.

Trump's supporters stick to him

Governors of US states negotiating with local entrepreneurs seem grateful that the trade dispute is not the focus of such an event. This was noted by the fact that none of them themselves addressed the issue of punitive tariffs – although statements circulate almost daily from industries that are suffering from the trade war.

At the investor summit, they praised their regional advantages: a good port connection, a skilled workforce, tax incentives, the will to innovate, broadband expansion. From the governors' point of view, business must continue, despite Trump's quarrels with international leaders.

The governor of the small state of Oklahoma, Kevin Stitt, was supported by Trump in the election campaign. He does not lose critical word about the president. "The government is very helpful, they really want to work with the states," he told Handelsblatt. "I'm not worried at all, we fully support our president. In the long term, he wants to make the conditions in the trade fairer, that will help us. "

But if you ask the Republican, where concretely the tariffs so far had used the US, he evades. "I can not say exactly where the tariffs help us, but they do not hurt us," said Stitt. "In my state we have more revenue anyway. Life is good in Oklahoma! We are fine". He trusted the president. "He has a lot to take, but the reason is he's messing things up."

Auto duties are not off the table

Another representative from Oklahoma recently drew a more nuanced picture in US media. US Senator James Lankford, also a Republican, warned of the "destabilizing effects" of the trade war. Farmers, consumers and the manufacturing industry would feel the consequences of tariffs long ago.

But before the presidential election, most of the Republicans seem to want to demonstrate unity with Trump. Ohio governor Mike DeWine celebrates a small $ 25 million investment by an Italian storage room provider at the Hilton hotel. Most recently, the state hit the headlines over the shutdown of General Motors, which was badly hit, but that's not as much a topic at the summit as Trump's punitive tariffs. "I do what a governor needs to do: create jobs," DeWine said.

The situation is similar with his Kentucky counterpart. The state is home to many Bourbon distilleries affected by the EU's retaliatory tariffs. The automakers Toyota and Ford, which produce in Kentucky, have complained about steel and aluminum tariffs, the soybean association complains about losses, because of the throttled decreases from China.

Governor Matt Bevin tries the balancing act, on the one hand Trump not in the back to fall, and nevertheless to cultivate the relations with foreign entrepreneurs. He recently invited 400 Chinese politicians and business representatives to his state. "It's about respect, listening and openness," Bevin told Handelsblatt. "A few years ago we had three or four Chinese companies in Kentucky, now it's 15. I want it to be 150."

Only very subtly, he insists that soon a US trade agreement with China must come about. "The world's two largest economies will sooner or later come to an agreement. That could happen before the presidential election in 2020, at least it should. "

Otherwise, he praises Trump, whom he calls a confidant, beyond measure. In contrast to the US government, he does not see car imports as a threat to national security. The White House had said in a word in May that "current levels of imports of motor vehicles and certain parts of motor vehicles threaten to undermine national security". Foreign competition prevents domestic manufacturers from investing sufficiently in future technologies, which in turn undermines US military clout.

"Cars are no threat to national security"

In conversation with Bevin you quickly realize that he does not want to mess with car makers from home and abroad. "Of course, cars are not a threat to national security," he said. Not cars are threatening, "but the potentially declining ability of the US to remain an independent nation with a strong industrial base."

Trump's trade policy would take on this challenge. The damage of the already existing punitive tariffs is limited. "We have record levels of exports and the lowest unemployment in our history. The economy is strong and people are grateful that the president is also fighting for US interests on the international stage. "

However, not all states can register growing exports. Tennessee is said to have lost $ 500 million in exports in the last quarter of 2018 due to tariffs, and Nebraska lost $ 1 billion for the full year. The US Chamber of Commerce is against the punitive tariffs, complaints come from the manufacturing industry and farmers. The International Monetary Fund recently lowered its growth forecast.

But so far, the US is spared by shock numbers and a broad, nationwide effect. Economic growth remains stable at just over three percent – making it easier for Trump's supporters to be faithful to his side. At least Governor Bevin believes that Trump will defend his post in the presidential election of 2020. "What he does is good for America's economy. In the big cities of the East Coast, the President may be unpopular, but in real America, the heartland, he is very, very popular. "

More: In foreign policy, the US President does not shy away from any confrontation – nor provocation. How Trump's policy harms the US, read here.



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