Issue Brief
White
House Advisor Peter Navarro's Disastrous Influence On the Economy
by Bryan
Riley April 20, 2020
If recent
history is any guide, one of the obstacles to an economic rebound from the
coronavirus pandemic will be whether Peter Navarro, President Trump’s economic
Svengali, continues to unduly influence American economic policy.
Navarro
serves as the Director of Trade and Manufacturing Policy for President Trump.
Since being brought on to serve as President Trump’s trade and manufacturing
expert, Navarro has been thwarting U.S. economic growth every step of the way.
Unfortunately for America, Navarro’s influence appears to be growing. President
Trump recently gave him the additional responsibility of serving as the head of
economic planning under the Defense Production Act.
Navarro
hands China a victory
China and
the World Health Organization (WHO) deserve to be criticized for their response
to the coronavirus outbreak. Had China shared more information sooner, American
lives could have been saved. China refused to allow the U.S. Centers for
Disease Control and Prevention (CDC) to provide assistance, and failed to share
complete and transparent information about the threat.[1]
But after
the coronavirus pandemic hit, Navarro handed a huge victory to communist China
by advocating policies that make the United States—not China—look like the bad
guy.
Instead of
leading efforts to prevent countries from imposing barriers to exports of
personal protective equipment (PPE), pharmaceuticals, and other needed goods,
the United States imposed limits of its own. According to an April 3
presidential memorandum, “To ensure that these scarce or threatened PPE
materials remain in the United States for use in responding to the spread of
COVID-19, it is the policy of the United States to prevent domestic brokers,
distributors, and other intermediaries from diverting such material
overseas.”[2] Navarro is now reportedly drafting a “Buy America” order for
medical goods designed to further restrict trade in the future.[3]
Thanks to
Navarro, countries that should be angry at China for its role in the
coronavirus pandemic are instead directing their anger toward the United
States. A Politico headline summed things up: “‘Lord of the Flies: PPE
Edition’: U.S. cast as culprit in global scrum over coronavirus supplies.”[4]
Weakening
the U.S. COVID-19 response
American
pharmaceutical manufacturers have had to divert resources from working on a
cure and vaccine for COVID-19 to fend off attacks from Navarro and possible new
Buy America mandates.[5] Navarro said: “The global Big Pharma lobby which has
moved all of our production offshore is now lying about an executive order they
haven’t read.”
This is an
example of how the President is poorly served by Navarro’s counsel: According
to the U.S. Bureau of Labor Statistics, 294,250 Americans work in the
pharmaceutical manufacturing industry.[6]
While
Navarro once said his role was to validate President Trump’s intuition, which
is “always right,” he seized on the coronavirus crisis as an opportunity to
undermine President Trump’s intuition and replace it with his own policy
preferences. For example, President Trump’s intuition was to avoid use of the
Defense Production Act: “But you know, we're a country not based on
nationalizing our business. Call a person over in Venezuela, ask them how did
nationalization of their businesses work out? Not too well."[7] Just a few
days later, he appointed Navarro to lead economic planning efforts under the
Defense Production Act.
According to
Navarro, “We wouldn't be having this problem if we had the domestic production
of essential medicines, medical countermeasures, medical supplies like masks
and medical equipment like ventilators. If we made it here, we wouldn't be
faced with this.”[8]
In fact,
there is no reason the United States cannot plan ahead to maintain full
stockpiles of medical equipment, regardless of where the equipment is made.
Moreover, as Chad Bown of the Peterson Institute noted: “US tariffs on imports
from China have threatened to cause shortages of vital medical products used to
fight COVID-19.”[9] According to an April 12 Wall Street Journal report:
“Companies asking for exemptions from the Trump administration’s tariffs on
Chinese imports say widespread shortages of hand sanitizer, disinfectants and
other products needed to combat the spread of the coronavirus are being
exacerbated by the levies.”[10]
Navarro’s
anti-business agenda
Putting Mr.
Navarro in charge of the Defense Production Act was like putting the fox in
charge of the henhouse, given his long-standing hostility to U.S. businesses.
To Navarro, American executives who disagree with his flawed economic proposals
are unpatriotic “unregistered foreign agents.”[11] In his book Death by China,
Navarro wrote:
“You
can’t trust corporations.”
“[S]ome of
America’s biggest companies—from Caterpillar and Cisco to GM and Microsoft—have
been fully complicit in the Chinese politics of ‘first divide America and then
conquer it.’”
“So from now
on, whenever you see a big company like 3M, Cisco, or Ford offshoring another
plant to China, please understand that the loss of jobs is not confined to the
company in question.”
Navarro’s
grudge against companies like GM and 3M may even have played a role in The
White House singling them out for public abuse.
For example,
rather than resolving a dispute with 3M over production of N95 respirators in a
businesslike manner, Navarro went on the attack, with statements like: “Let me
just say that 3M needs to stop whining,” and “3M remains an outlier and its
propaganda war must stop.”[12] Navarro was triggered when 3M publicly pushed
back against his economic controls:
“Yesterday,
the Administration formally invoked the Defense Production Act (DPA) to require
3M to prioritize orders from the Federal Emergency Management Agency (FEMA) for
our N95 respirators… The Administration also requested that 3M cease exporting
respirators that we currently manufacture in the United States to the Canadian
and Latin American markets. There are, however, significant humanitarian
implications of ceasing respirator supplies to healthcare workers in Canada and
Latin America, where we are a critical supplier of respirators. In addition,
ceasing all export of respirators produced in the United States would likely
cause other countries to retaliate and do the same, as some have already done.
If that were to occur, the net number of respirators being made available to
the United States would actually decrease. That is the opposite of what we and
the Administration, on behalf of the American people, both seek.
3M’s alarm
about the risk of foreign retaliation is not propaganda--it’s sound advice.[13]
When asked
in 2018 if the Trump administration’s tariffs would invite retaliation from our
trading partners, Navarro replied “I don’t believe any country is going to
retaliate.”[14] Instead, just about every country retaliated, and the average
tariff facing 8,073 U.S. export products increased from 7.3 percent to 20.4
percent.[15] The damage continues to mount: On April 6, the European Union
announced new tariffs on U.S. exports to retaliate against U.S. tariffs on
steel and aluminum “derivative products.”[16]
Navarro
vs. Republicans
Navarro has
written “I consider myself a strong environmentalist and a progressive...I do
not trust the Republican Party to do anything but trash the environment under
the phony banner of economic progress...I'm firmly a Democrat."[17] A
former colleague referred to him as “an environmental pit bull.”[18]
Navarro also
has a long track record of running down the voters President Trump relies on.
He has written about the purported “failure of Reaganomics,” and criticized
“insufferably bigoted, close-minded, and dangerously well-disciplined storm
troopers on the religious right.”[19]
On issues
like these, it is not clear where his loyalties lie. Navarro’s former pollster
called him “a ‘chameleon’ whose ‘policy positions will be the policy positions
that will get him the job and keep him the job.’”[20] Unfortunately U.S.
Senators never had a chance to ask him about these issues. Unlike Cabinet
Members and many other key presidential advisers, Navarro was not required to
undergo Senate confirmation hearings.
The White
House’s enemy within
Key Trump
administration initiatives have included tax cuts, regulatory relief, and an
effort to make the United States the best place in the world to do business.
Peter Navarro has undermined all these efforts. In fact, if an outsider
observer just looked at U.S. trade policy, they would conclude the Trump
administration is the most pro-tax, pro-regulation administration in recent
U.S. history.
Any possible
benefits from the Tax Cuts and Jobs Act were at least partially negated by
regressive import tax hikes advocated by Navarro.[21] In fiscal year 2020,
these tax increases will cost the average U.S. household $462.
According to
the White House, “Since taking office, President Donald J. Trump has led
historic deregulation efforts to roll back red tape that burdened Americans and
stifled economic growth.[22] Again, Navarro intervened to advocate massive
increases in domestic content requirements, Buy America mandates, controls on
where American companies are allowed to produce, and other costly
regulations.[23] If he has his way, nearly every business transaction in the
country will be subject to the control of federal bureaucrats with immense
control over any and all transactions affecting international trade and
investment.[24]
President
Trump says he wants to make the United States the best place in the world to do
business.[25] In contrast, Navarro views job-creating foreign investment as
“conquest by purchase,” and appears to view the 8.1 million Americans who work
for foreign-owned companies as a national security threat.[26]
For example,
last year a White House proclamation asserted that U.S. national security
depends on “American-owned” auto production.[27] Such efforts make it much more
difficult to attract new investment to the United States. As Toyota commented:
“Today’s proclamation sends a message to Toyota that our investments are not
welcomed, and the contributions from each of our employees across America are
not valued.”[28]
President
Trump recently praised foreign-owned Bayer and Sandoz for their coronavirus
efforts.[29] At the same time, Navarro has been drafting a “Buy America” order
that could cut off Americans from global suppliers in the event of future
medical catastrophes.[30]
Undermining
American farmers and ranchers
Agricultural
producers in America’s red states have been a big source of support for
President Trump. They should be scared to death of Navarro’s Buy America
schemes.
For example,
when Navarro says, "never again should we rely on the rest of the world
for our essential medicines and countermeasures," he is providing a
template that other countries can copy to restrict U.S. food exports. The
United States is by far the world’s largest food exporter, and exports account
for 20 percent of U.S. agricultural production.
And, of course, it is American farmers who have borne the brunt of
retaliatory tariffs imposed in response to Navarro’s trade war.[31]
Until
recently, the strong economy masked Navarro’s damage. Earlier this year,
Navarro wrote: “Yet with each new tariff—on dishwashers, solar panels,
aluminum, steel and more than $300 billion of Chinese imports—the economy
remains robust.”[32] That’s no longer the case. Americans will need to pull
together to get back on track. Peter Navarro should not be allowed to block
those efforts.
Navarro
vs. America
The actions
Navarro has taken have inflicted significant damage on America. Perhaps more
importantly, his efforts run contrary to
U.S. efforts to promote freedom here and abroad. After World War II, President
Truman observed:[33]
But if
controls over trade are really to be tight, tariffs are not enough. Even more
drastic measures can be used. Quotas can be imposed on imports, product by
product, country by country, and month by month. Importers can be forbidden to
buy abroad without obtaining licenses. Those who buy more than is permitted can
be fined or jailed. Everything that comes into a country can be kept within
limits determined by a central plan. That is regimentation. And this is the
direction in which much of the world is headed at the present time.
If this
trend is not reversed, the Government of the United States will be under
pressure, sooner or later, to use these same devices to fight for markets and
for raw materials. And if the Government were to yield to this pressure, it
would shortly find itself in the business of allocating foreign goods among
importers and foreign markets among exporters and telling every trader what he
could buy or sell, and how much, and when, and where. This is precisely what we
have been trying to get away from, as rapidly as possible, ever since the war.
It is not the American way.
It may not
be the American way, but it is the Peter Navarro way. In the aftermath of the
coronavirus, President Trump must not allow a bureaucrat who has not withstood
the scrutiny of nor gained the consent of the duly elected United States Senate
to wield so much power to block our economic recovery, and he must reject
Navarro’s ongoing efforts to undermine the free-enterprise system that has made
America a free and prosperous nation.
[1] Sheehy,
Kate. “China Has yet to Allow CDC in Country to Help with Coronavirus.” New
York Post , February 3, 2020.
https://nypost.com/2020/02/03/china-has-yet-to-allow-cdc-in-country-to-help-with-coronavirus/.
[2] Donald
J. Trump, “Memorandum on Allocating Certain Scarce or Threatened Health and
Medical Resources to Domestic Use.” The White House, April 3, 2020,
https://www.whitehouse.gov/presidential-actions/memorandum-allocating-certain-scarce-threatened-health-medical-resources-domestic-use/.
[3]
Stankiewicz, Kevin. “White House advisor Peter Navarro: I’m bringing an
executive order to Trump that would reduce US foreign dependency on medicines.”
CNBC, March 16, 2020.
https://www.cnbc.com/2020/03/16/navarro-to-bring-executive-order-to-trump-on-foreign-dependency-on-drugs.html.
[4] Toosi,
Nahal.“‘Lord of the Flies: PPE Edition’: U.S. Cast as Culprit in Global Scrum
over Coronavirus Supplies.” POLITICO, April 3, 2020.
https://www.politico.com/news/2020/04/03/ppe-world-supplies-coronavirus-163955.
[5] Hirsch,
Lauren. “Trump Advisor Peter Navarro Slams Big Pharma’s Lobbying against
Possible ‘Buy America’ Executive Order.” CNBC, March 19, 2020.
https://www.cnbc.com/2020/03/19/coronavirus-trump-aide-peter-navarro-slams-big-pharma.html.
[6] U.S.
Bureau of Labor Statistics. “Pharmaceutical and Medicine Manufacturing - May
2018 OES Industry-Specific Occupational Employment and Wage Estimates.”
BLS.gov, May 2018. Retrieved from:
https://www.bls.gov/oes/2018/may/naics4_325400.htm.
[7] Doubek,
James. “FACT CHECK: Trump Compares Defense Production Act To Nationalization.”
NPR.org, March 23, 2020.
https://www.npr.org/sections/coronavirus-live-updates/2020/03/23/819926854/fact-check-trump-compares-defense-production-act-to-nationalization.
[8]
Whitaker, Bill. “Sick Doctors, Nurses and Not Enough Equipment: NYC Health Care
Workers on the Fight against the Coronavirus.” April 12, 2020.
https://www.cbsnews.com/news/personal-protective-equipment-ppe-doctors-nurses-short-supply-60-minutes-2020-04-12/.
[9] Bown,
Chad P. “Tariffs Disrupted Medical Supplies Critical to US Coronavirus Fight.”
Peterson Institute for International Economics, March 17, 2020,
https://www.piie.com/research/piie-charts/tariffs-disrupted-medical-supplies-critical-us-coronavirus-fight.
[10] Stech
Ferek, Katy, and Zumbrun, Josh. “U.S. Tariffs Hamper Imports of Sanitizer,
Disinfectants, Some Companies Say.” Wall Street Journal, April 12, 2020.
https://www.wsj.com/articles/u-s-tariffs-hamper-imports-of-sanitizer-disinfectants-11586683800.
[11] Bryan,
Bob. “Trump’s Top Trade Adviser Just Warned Goldman Sachs and Wall Street Not
to Leave Their ‘stench’ on the US-China Trade War Talks.” Business Insider,
November 9, 2018.
https://www.businessinsider.com/navarro-trump-china-trade-war-goldman-sachs-wall-street-2018-11.
[12] Creitz,
Charles. “WH Trade Adviser Slams 3M for ‘Acting like a Sovereign Nation’: ‘Stop
Whining’ and Make Masks for Americans.” Fox News, April 3, 2020.
https://www.foxnews.com/media/peter-navarro-slams-3m-stop-whining; Swanson,
Ana, Kanno-Youngs, Zolan, and Haberman, Maggie. “Trump Seeks to Block 3M Mask
Exports and Grab Masks From Its Overseas Customers.” The New York Times, April
3, 2020.
https://www.nytimes.com/2020/04/03/us/politics/coronavirus-trump-3m-masks.html.
[13] “3M
Response to Defense Production Act Order.” 3m.com, April 3, 2020. Retrieved
from:
https://news.3m.com/press-release/company-english/3m-response-defense-production-act-order.
[14]
Krawczyk, Kathryn. “Trump Trade Adviser Peter Navarro Insisted No Country Would
Dare Retaliate for Trump’s Tariffs. He Was So Wrong.” The Week, July 2, 2018.
https://theweek.com/speedreads/782615/trump-trade-adviser-peter-navarro-insisted-no-country-dare-retaliate-trumps-tariffs-wrong.
[15]
Fajgelbaum, Pablo et al. “The Return to Protectionis.” National Bureau of
Economic Research, October 2019. https://www.nber.org/papers/w25638.pdf.
[16]
Stearns, Jonathan. “EU to Boost Tariffs on U.S. Goods in Metals-Trade Dispute.”
Bloomberg, April 6, 2020.
https://www.bloomberg.com/news/articles/2020-04-06/eu-to-boost-tariffs-on-u-s-goods-in-metals-trade-dispute.
[17]
Navarro, Peter. San Diego Confidential, 1 edition (San Diego: QT Press, 1999).
[18]
Bravander, Robin, and Colman, Zach. “WHITE HOUSE: A ‘Pit Bull’ for Climate
Could Soon Sit next to Trump.” E&E News, March 8, 2018.
https://www.eenews.net/stories/1060075783.
[19]
Reynolds, Alan. “Trump Adviser Peter Navarro: Reagan Critic, Industrial Policy
Fan.” Cato Institute, October 13, 2016.
https://www.cato.org/blog/trump-adviser-peter-navarro-reagan-critic-industrial-policy-fan
[20]
Bravander and Colman.
[21] Riley,
Bryan. “Two Years of Trade War Have Taken a Significant Economic Toll.”
National Taxpayers Union, March 24, 2020,
https://www.ntu.org/foundation/detail/two-years-of-trade-war-have-taken-a-significant-economic-toll.
[22]
“President Trump’s Historic Deregulation Is Benefitting All Americans.” The
White House, October 21, 2019. Retrieved from:
https://www.whitehouse.gov/briefings-statements/president-trumps-historic-deregulation-benefitting-americans/.
[23]
Zargham, Mohammad. “Trump to Sign Order on U.S. Content Thresholds for Steel,
Iron: Navarro.” Reuters, July 15, 2019.
https://www.reuters.com/article/us-usa-trump-steel-idUSKCN1UA1JU.
[24]
Krishan, Nihal. “‘Enormous Power Grab’: Business Groups Bash Commerce
Department Supply-Chain Security Proposal.” Washington Examiner, January 16,
2020.
https://www.washingtonexaminer.com/policy/economy/enormous-power-grab-business-groups-bash-commerce-department-supply-chain-security-proposal.
[25]
“Secretary Ross Announces Members of Investment Advisory Council.” Office of
Public Affairs, SelectUSA.gov, August 12, 2019,
https://www.selectusa.gov/press-releases.
[26]
Hayward, John. “Peter Navarro on ‘Conquest by Purchase’: Trade Deficits Are
‘Turning Over Our Country to the Rest of the World’.’” Breitbart, April 21,
2017,
https://www.breitbart.com/radio/2017/04/21/peter-navarro-conquest-purchase-trade-deficits-turning-over-country-world/;
“Direct Investment & Multinational Enterprises (MNEs),” U.S. Bureau of
Economic Analysis. Retrieved from: https://apps.bea.gov/iTable/index_MNC.cfm.
(Accessed April 13, 2020.)
[27]
“Adjusting Imports of Automobiles and Automobile Parts Into the United States.”
The White House, May 17, 2019.
https://www.whitehouse.gov/presidential-actions/adjusting-imports-automobiles-automobile-parts-united-states/.
[28] Turner,
Ashley. “Toyota Says Trump’s Latest Tariff Threat Shows Japanese Investments in
US Are ‘Not Welcomed.’” CNBC, May 17, 2019.
https://www.cnbc.com/2019/05/17/toyota-says-trump-tariff-threat-shows-investments-in-us-not-welcomed.html.
[29]
“Remarks by President Trump and Members of the Coronavirus Task Force in a
Press Briefing.” The White House, March 30, 2020.
https://www.whitehouse.gov/briefings-statements/remarks-president-trump-members-coronavirus-task-force-press-briefing/.
[30]
Cassella, Megan. “Battle Continues over ‘Buy American’ Order.” POLITICO, March
30, 2020, https://politi.co/2R0f81z.
[31]
Dillinger, Jessica. “Which Countries Export the Most Food?” WorldAtlas, April
25, 2017. Retrieved from:
https://www.worldatlas.com/articles/the-american-food-giant-the-largest-exporter-of-food-in-the-world.html;
“USDA ERS - Agricultural Trade.” United States Department of Agriculture
Economic Research Service. Retrieved from:
https://www.ers.usda.gov/data-products/ag-and-food-statistics-charting-the-essentials/agricultural-trade/
(Accessed April 13, 2020.)
[32]
Navarro, Peter. “Give Trump’s Tariffs a Fair Test.” Wall Street Journal,
January 13, 2020.
https://www.wsj.com/articles/give-trumps-tariffs-a-fair-test-11578955956.
[33]
President Harry S. Truman, “Address on Foreign Economic Policy, Delivered at
Baylor University.” The American Presidency Project, March 6, 1947. Retrieved
from:
https://www.presidency.ucsb.edu/documents/address-foreign-economic-policy-delivered-baylor-university.
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