Jun 2, 2019

Trump's war on global trade

Illustration: Aïda Amer/Axios

The U.S. is in the middle of a full-blown trade war with China, our largest source of imports. There's broad bipartisan consensus that even if the Trump administration's tactics are misguided, China achieved its dominant trade position unscrupulously, being selective as to which international trade norms it would accept.

GoPro will move some production from China to Mexico to avoid Trump tariffs.
— Silicon Valley Business Journal headline, May 14

Some broader context:

  • America's largest backup source of imports is Mexico, a member in good standing of NAFTA since inception. A natural part of any U.S. trade war with China would normally consist in encouraging American companies to source their products within the North American free trade area, rather than shipping them across the Pacific.
  • The White House is in a hurry to ratify USMCA, the successor agreement to NAFTA. The proposed treaty has support from Mexico, which also wants to see it signed quickly.
  • In six months, the U.S. could find itself fighting another big trade battle, this time with the EU and Japan.
  • In just over a month, the U.S. plans to end India's preferential trade privileges.

The bottom line: This is the worst possible time to start a trade war with Mexico, our most natural ally in any economic confrontation with China. And yet now we seem to be entering an entirely voluntary and preventable two-front war.

  • Any tariffs on Mexico will face legal challenges and might never even happen in the first place: Trump is nothing if not mercurial on such matters.

Why it matters: To get embroiled in one major trade war might be considered a misfortune; to find oneself in two of them looks like carelessness. Trump can't end global trade. But by making it much less predictable, he can cripple a key driver of American — and global — economic vitality.

Go deeper: How Trump's Mexican tariffs would impact goods in America

Go deeper

Coronavirus dashboard

Illustration: Aïda Amer/Axios

  1. Global: Total confirmed cases as of 4:30 p.m. ET: 1,579,690 — Total deaths: 94,567 — Total recoveries: 346,780Map.
  2. U.S.: Total confirmed cases as of 4:30 p.m. ET: 452,582 — Total deaths: 16,129 — Total recoveries: 24,790Map.
  3. Public health latest: U.S. has expelled thousands of migrants under coronavirus public health orderDr. Anthony Fauci said social distancing could reduce the U.S. death toll to 60,000.
  4. Business latest: The Fed will lend up to $2.3 trillion for businesses, state and city governments — Another 6.6 million jobless claims were filed last week.
  5. World latest: Boris Johnson is moved out of ICU but remains in hospital with coronavirus.
  6. In Congress: Senate in stalemate over additional funding for small business relief program.
  7. What should I do? Pets, moving and personal healthAnswers about the virus from Axios expertsWhat to know about social distancingQ&A: Minimizing your coronavirus risk.
  8. Other resources: CDC on how to avoid the virus, what to do if you get it.

Subscribe to Mike Allen's Axios AM to follow our coronavirus coverage each morning from your inbox.

Biden rolls out new policies in effort to court Sanders supporters

Photo: Scott Olson/Getty Images

The Biden campaign announced two new policies on Thursday on health care and student debt that are squarely aimed at appealing to supporters of Bernie Sanders, who ended his campaign for the Democratic nomination on Wednesday.

Why it matters: The policies don't go as far as Sanders' platform, but they signal that Biden is serious about incorporating elements of his former rival's agenda in an effort to help unify the Democratic Party and defeat President Trump in the general election.

Reports: Saudi Arabia and Russia reach major deal to cut oil production

Photo: Joe Klamar/AFP via Getty Images

OPEC+, led by mega-producers Saudi Arabia and Russia, reached a tentative agreement Thursday to impose large cuts in oil production as the coronavirus pandemic fuels an unprecedented collapse in demand, per Bloomberg and Reuters.

Why it matters: The revival of the OPEC+ collaboration patches up the early March rupture between the countries, which had pushed already depressed prices down much further by threatening to unleash even more new supplies into the saturated market.