Opinion

Trump should say less on trade. The stock markets will thank him

Transparency’s a good thing, but the president’s tweets only rattle the markets

This kind of instability only brings back the gnawing fear so many Americans experienced in the throes of the 2008 financial crisis, Winston writes. (Spencer Platt/Getty Images)

OPINION — Well, we’re back on the trade roller coaster this week — and as we’ve learned over the past year, it can be a bumpy ride that takes a strong stomach just to hang on.

But here we are again, with the markets tanking on Monday as the Dow took a 2.4 percent hit and the Nasdaq, so dependent on big tech, dropped nearly 270 points, a 3.4 percent loss, raising new fears that stalled trade deals threaten to slow the country’s booming economy. As I write this on Tuesday, happily, the markets have recovered some of Monday’s losses.

But this isn’t the first time investors have had to swallow hard. Last December, we went through a similarly unnerving experience. According to Fox Business, it was the worst December for stocks since 1931. But the first quarter of 2019 saw stocks gain back much of what they lost. More good jobs and GDP reports have also helped sustain public optimism about the economy.

To investors, especially small investors, these are moments of high anxiety, but economists look at these swings on Wall Street in a more macro sense, trying to determine the long-term impact on the country’s fiscal health. That’s all well and good, a proper and necessary perspective needed for good decision-making by government and business leaders.

But to ignore or diminish the personal impact of trade wars and market turmoil on ordinary Americans misses the political impact, especially at a time when cost-of-living issues have risen to the top of voter concerns. With somewhere in the neighborhood of half the country invested in equities either directly or indirectly, millions with their retirement funds tied up in the markets, this kind of instability only brings back that gnawing fear so many Americans experienced in the throes of the 2008 financial crisis.

In fact, from Winning the Issues research done last fall (Aug 29-Sept. 5) that looked at the 10-year impact of the 2008 financial crisis, a quarter of the electorate (27 percent) said their financial situation, investments and retirement savings had still not recovered from the 2008 crash and recession.

[‘Grimmer by the day’ — Farmers’ love for Trump in peril]

I’m not saying President Donald Trump’s decision to take on what he sees as America’s decadeslong disadvantage with its trading partners, friends and competitors alike, was a bad one. Even Senate Minority Leader Chuck Schumer and some of his fellow Democrats have been surprisingly supportive of the administration’s tough China trade policy.

But here’s my beef. Do we really have to negotiate these extraordinarily delicate trade talks in Macy’s window?

Transparency is generally a good idea when it comes to governing, but there is always an ebb and flow to most intergovernmental talks, ups and downs when negotiating the details of a complicated deal, whether it’s national security or economic security. The president’s constant tweets, at times in conflict with his own economic advisers’ statements, only rattle the markets and the public at large.

Perhaps the president feels some market volatility and rising costs for producers and consumers will, in the end, be worth the cost. And he does see the personal impact that his trade policies will have on some segments of the country. He’s promised to support the nation’s farmers, for example, who have already made big sacrifices as the elusive China deal led to higher tariffs on U.S. agricultural exports.

Last month, the president said, “I tell you, our farmers are great patriots. They understand that they’re doing this for the country. And we’ll make it up to them.”

He’s right that farmers understand what’s at stake long term, and at heart, they are both pragmatic and patriotic. Their role in feeding the nation also deserves special support.

But stock drops like we saw on Monday take a terrible toll on 401(k) plans and the retirement savings of millions of average Americans as well, folks who won’t get a reimbursement check from the feds to make up their losses. Neither will consumers paying more for Chinese goods from clothing to hardware.

I’m not arguing they should, but the impact of this roller coaster market on personal financial situations shouldn’t be underestimated. When half the electorate says they are living paycheck to paycheck (as in the Winning the Issues survey of April 30 — May 1), any price increases are going to be a big problem for them to manage.

When tweets roil the markets, it reinforces people’s fear that the economy could fall almost overnight as it did in 2008. While our most recent Winning the Issues survey shows that the right track/wrong track on the direction of the country remains under water, 34-53 percent, when asked about the direction of the economy voters were more positive, 45-35 percent.

Since the shutdown, Republicans have gained an 8 point lead over Democrats on the question of which party can best handle the economic issues, 46-38 percent, and the growing economy has improved the president’s economic job approval to be almost even, now at 42-43 percent (approve/disapprove). These numbers, however, don’t reflect what happened Monday.

Most people remember what happened in 2008. They remember losing jobs and seeing their retirement funds wiped out as Wall Street lost more than a third of its value. It took 10 years and the right economic policies to get the American economy growing again.

Last December’s market nose-dive once more reinforced people’s fears that maybe we aren’t as stable as we thought. Maybe things can go south again as they did in 2008. Over the past few months, stocks have clawed their way back. And then, two days ago, people went through the same kind of upsetting moment when the China talks went off the rails and the markets reacted.

Trump’s decision to bring China to the table to negotiate a trade deal that will deliver free and fair trade between our two nations — a deal that is verifiable and enforceable — was the right course and still is. But the negotiation process must be managed with a sensitivity to the markets and the people invested in them, especially small investors and retirees.

When trade talks go beyond economic policies and the intricacies of international trade and begin to personally affect America’s families, it can easily translate into a lack of confidence not only in the negotiations but in the growth economy Trump’s policies have produced. And from a bigger picture, chip away at people’s belief in capitalism over socialism.

Trump did the right thing by standing up to unfair trade practices that have cost American jobs and prosperity for far too long. But less tweeting and more low-key negotiating is a better approach, especially for an American public tired of the roller coaster.

David Winston is the president of The Winston Group and a longtime adviser to congressional Republicans. He previously served as the director of planning for Speaker Newt Gingrich. He advises Fortune 100 companies, foundations, and nonprofit organizations on strategic planning and public policy issues, and is an election analyst for CBS News.

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