Pro-, Anti-Trade Voices Duke It Out at White House

Death by economic insanity: Maybe the lunatic fringe will be sidelined on trade, at least, at the White House.

It was always going to end up here, I think: American President Donald Trump has appointed a bunch of isolationist America-firsters who would like nothing better than to slow down the United States' engagement in international trade, or at least sign extremely lopsided deals with prospective trade partners. (Witness the call for "bilateral" deals that the US can easily extricate itself from if it views the other party as being "unfair.") On this side you have the wingnut Steve Bannon and the Jeff Sessions acolyte Stephen Miller, both of Muslim Ban fame. Throw in the ultra-protectionist, China fearmonger Peter Navarro as well who acts as trade adviser to Trump. Commerce Secretary Wilbur Ross has also written a protectionist screed together with Navarro.

On the other hand, Trump has appointed more conventional sorts--"neoliberal" if you will--like Goldman Sachs alumni Gary Cohn who heads the National Economic Council and of course Steve Mnuchin, the Treasury Secretary.

Things are coming to a head as those egregious "trade violators" the Germans are coming to town next week in the form of Chancellor Angela Merkel. Germany runs the third-largest trade surplus with the United States at $64.87 billion in 2016. What to do? Obviously, the wingnut anti-trade faction wants to put Merkel on notice for Germany's evil ways, whereas the Cohn and Mnuchin don't want any part of this tomfoolery:

According to more than half a dozen people inside the White House or dealing with it, the bitter fight has set a hardline group including senior adviser Steve Bannon and Trump trade adviser Peter Navarro against a faction led by Gary Cohn, the former Goldman Sachs executive who leads Mr Trump’s National Economic Council.

At the centre of the debate is Mr Navarro, a firebrand economist who has angered Berlin and other European allies by accusing Germany of exploiting a “grossly undervalued” euro and calling for bilateral discussions with Angela Merkel’s government over ways to reduce the US trade deficit with Europe’s most powerful economy.

The Goldman Sachs duo is trying to portray Navarro as he really is: an isolationist extremist:

According to people familiar with White House discussions, Mr Cohn and others have seized on Mr Navarro’s public comments — and widespread criticism by economists of his stand on trade deficits and other matters — to try and sideline him. That has led to discussions over moving Mr Navarro and the new National Trade Council he leads out of the White House and to the Commerce Department, headed by another Wall Street veteran, Wilbur Ross. Mr Cohn has also been featuring more prominently in discussions over the renegotiation of the North American Free Trade Agreement with Canada and Mexico, one of Mr Trump’s top trade priorities. 

For now at least, Cohn seems to be winning the battle with Navarro in building a White House presence:

People familiar with the White House battle over trade said that Mr Navarro, who did not respond to a request for comment, was cutting an increasingly isolated figure in the administration. He has been operating with a very small staff out of an office in the Old Executive Office Building adjacent to the White House, while Mr Cohn has been adding staff to his NEC base inside the president’s residence itself.

Fun times. I guess we'll see how Angela Merkel is treated as to how this internal conflict is playing out early on in the Trump administration. Its consequences will obviously have significant implications for US trade policy and the world economy more broadly speaking.