Editorial: No one wins in a trade war

If he’s confirmed as ambassador, Terry Branstad will go to Beijing bearing a generous gift for the Chinese, with a note attached:

TPP, RIP.

Make no mistake, the death of the Trans-Pacific Partnership was exactly what China wanted. The question now is: Will whatever replaces the trade deal be a gift for American workers and companies, as well as our national security?

The pressure is on President Donald Trump and his prowess as a deal-maker. But the onus, too, should be on the labor unions and Democrats who played a role in killing the 12-nation TPP. Both parties need to spell out what they expect in a new era of trade negotiations. None of us will benefit if Trump’s war of words with China, Mexico and other nations becomes a trade war.

"If President Trump is serious about a new policy to help American workers then I would be delighted to work with him,” said Sen. Bernie Sanders, who campaigned relentlessly against the much-maligned trade deal — and pushed Hillary Clinton to change course on the trade deal, too.

Such cooperation from Democrats would be welcome, because much is at stake. Iowa exports $7.8 billion in commodities to the 11 countries that were to be part of the TPP. That includes Mexico and Canada, Iowa’s two biggest export customers. Trump is now targeting NAFTA, the 23-year-old deal that has more than doubled U.S. ag exports to the two neighbors.

“Trade in pork with Canada and Mexico has been so successful that any disruption in exports with either partner could hurt our producers’ ability to compete,” said John Weber, a pork producer from Dysart, Ia., and president of the National Pork Producers Council.

On Thursday, Trump suggested a 20 percent tax on imports from Mexico. Every Iowa company that does business in Mexico — and there are many, from Vermeer to Musco to Principal Financial Group — should worry about what happens next.

It’s unfortunate that Trump and the left have lumped TPP and NAFTA together. Let’s remember that TPP was proposed to correct some of the problems with NAFTA. As President Barack Obama said:

“NAFTA failed to require a minimum wage, ban workplace discrimination, protect the right to form a union and bargain collectively, or prohibit child and forced labor. TPP includes every single one of these standards, along with enforceable trade sanctions for any country that violates them.”

TPP would have eliminated thousands of tariffs on goods that the U.S. sells now or could in the future. Its death “is going to be devastating for American farmers and ranchers and businesses,” Ron Kirk, a former U.S. trade representative told CNBC this week.

Iowa could lose big if Trump moves lead to trade war, experts say

The trade deal also addressed environmental concerns, internet protections and a host of other issues. And it was intended in part to check China’s power.

Instead, the Chinese will jump at the opportunity to become the dominant power in global trade. Trump "just handed it over on a silver platter and they'll sit back and rake it in," Fred Bergsten, founding director of the Peterson Institute for International Economics, told CNN after the president killed the deal this week.

Chinese President Xi Jinping sounds more like a Republican than Trump does, going to the World Economic Forum and promoting free trade and decrying protectionism. Japan, Australia, Vietnam, Latin American nations and others are turning to China’s alternative to the TPP, the Regional Comprehensive Economic Partnership.

Trump is promoting bilateral trade agreements. That’s not necessarily bad, as deals with a single country can be completed much quicker. But what should be the objectives be of such deals? The Office of the U.S. Trade Representative's website now displays an “America First Trade Policy” that offers few details beyond “ensuring that American workers are given a fair shot a competing across the globe.”

That laudable goal leaves a lot of questions to answer. What exactly is the best deal for the U.S.? Is it as simple as keeping more factory jobs here? What about keeping the products we purchase affordable? (How would a border tax affect the cost of autos, for example?) How does the administration plan to open new markets for farmers and manufacturers? How important is leveling  the playing field on labor and environmental standards and intellectual property rights?

And will Trump’s deal-making be more transparent, defusing one of the major criticisms of the TPP?

Trade negotiations require many trade-offs, and diplomacy is different than real-estate negotiations. "The Art of the Deal" must not leave Americans worse off.