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Realpolitik equals Fair Trade equals a new NAFTA

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By John Riddell

Soon after the inauguration of President Trump, I wrote a column predicting that the tone and timber of his foreign policy would be that of Realpolitik. Certainly, the months since and the latest tariff pronouncement underscore the validity of this prognostication.
For commonality of understanding, Realpolitik is an approach to foreign policy that dates back approximately 160 years. It derives from the German language meaning the “politics of reality.”  Wikipedia further defines it as “politics or diplomacy based primarily on considerations of given circumstances and factors, rather than explicit ideological notions or moral and ethical premises.” Said differently, President Trump is strategically utilizing foreign trade policy to “Make America Great Again.”
To say that President Trump’s approach has his opponents with their hair on fire would be a serious understatement. Perhaps the most vociferous criticisms have come from professed conservatives who decry any government intervention into free market/free trade as heretical. Unfortunately, the vast majority of these doctrinaire adherents refuse to accept that their model or laboratory of free trade just simply doesn’t exist in this day and age. Laissez faire trade is an academic exercise, one that does not at all address the complex relationships among trading countries. As the president has correctly stated, free trade must equate to fair trade. From jobs to national security, fair trade benefits all Americans.
Now let’s consider for a moment an existing trade agreement that President Trump campaigned against. As some of you may remember, a Mr. H. Ross Perot single-handedly cost President George H. Bush a second term by running as a third-party candidate. As Mr. Perot famously remarked, “That sucking sound you hear is jobs going to Mexico.” This was Mr. Perot’s view and bumper sticker slogan for the North American Free Trade Act (NAFTA) and his subsequent campaigning efforts handed the presidency to no other than Bill Clinton. President Clinton owns NAFTA. President Trump has made no bones about his critical perception of the unfairness of the tenets of this agreement. Until recently, however, he hasn’t outlined a workable plan for change. But that is now changing.
The tariff proposal outlined by the White House is 25 percent on steel and 10 percent on aluminum. When you examine the list of top exporters of steel to the United States, lo and behold, two of the top four are Canada and Mexico, our two “partners” in NAFTA. Together these two countries represent about 25 percent of our total steel imports. Now the president has stated that he would strongly consider not applying these tariffs to Canada and Mexico if they would agree to renegotiate the components of NAFTA. This is the international negotiating/bargaining equivalent of the magical “two-fer,” a negotiating stroke of genius. By agreeing to better NAFTA trade terms for the United States, Canada and Mexico wouldn’t have to possibly cut their existing margins nor volumes on steel exports. This same desire for fair trade will undoubtedly extend to other countries, but there should be some expected “weeping and gnashing of teeth” while a period of adjustment takes place.
Now you may have seen in the national press that no less than Republican Speaker Paul Ryan has expressed a strong position against that of the White House. Upon hearing of the proposed tariff structure, the European Union was quick to threaten an increased import duty on Harley Davidson motorcycles, a company already experiencing a challenging sales environment. As you probably are aware, Harley Davidson motorcycles are in Speaker Ryan’s state of Wisconsin. Not exactly a subtle move on their part, but such is the world of global trade negotiations. A similar threat was made to Sen. Majority Leader McConnell in connection with bourbon and his home state of Kentucky.
As expected, the globalists hate Realpolitik and its implied pragmatism. It is, after all, an approach that has at its core a strong sentiment of nationalism. President Trump also certainly has at the core of his approach a strong sentiment of nationalism. I suggest that no one should expect this to change.

Following a successful international business career, John Riddell turned his attention to small-business/entrepreneurial pursuits that included corporate turnarounds, start-ups, teaching as an adjunct business school professor, authoring noted business and sports columns, and serving as vice president for the Chattanooga Chamber of Commerce directing its Center for Entrepreneurial Growth. E-mail him at jfriddell@msn.com. The former Georgetown resident now splits his time between Tennessee and Colorado.