An uncertain future for American competitiveness

The news Friday that the U.S. economy grew at 4.1% last quarter is welcome and commendable.  On Sunday, U.S. secretary of the treasury Steve Mnuchin predicted that the United States will experience as many as five more years of sustained 3% economic growth.  This increase is, in part, due to last year's tax reform and the administration's ongoing campaign to roll back regulations that affect American businesses.

However, President Trump's policies call these forecasts into question.  The tariffs on aluminum and steel imports are estimated to cost 180,000 U.S. jobs by 2020 and as much as $7.5 billion per year.  The proposed tariffs on auto imports may prove even more disruptive, costing as many as 600,000 jobs.  Indeed, the president's $12 billion in emergency relief for American farmers impacted by retaliatory tariffs from China is a clear warning that the escalating trade war will have wide-reaching implications for the U.S. economy.  If the United States were to bail out all of the industries affected by these tariffs, the Commerce Department reports that the project would cost U.S. taxpayers $40 billion.

While the administration's misguided actions are an attempt to address China's predatory trade practices, the truth is that only five percent of the steel and aluminum tariffs target China.  And while Mr. Trump claims to be using U.S. tariffs on goods from China and the European Union as a tool to ultimately lower trade barriers overall, the White House is not carrying that message to Congress.  In a meeting last week with Republican lawmakers, economic advisers Larry Kudlow and Peter Navarro reportedly had little to offer.  Rep. Mia Love (R-Utah) told The Weekly Standard after the meeting that "I need to know what the strategy is.  I need to know what to tell people, and if I don't have something to tell them, then it's just unacceptable."

The administration would do well to present its trade policy with clarity and precision and consider if its tariffs are truly the best way to compel other nations to lower their protectionist barriers to trade.  It should also continue its campaign to roll back regulations to further reduce unnecessary burdens on American businesses.

For their part, lawmakers who disapprove of the president's strategy should continue to voice their opposition and explain why free trade benefits the American economy.  An important step came on July 11, when 88 senators voted to support an increased role for Congress in determining trade policy.  This vote, while nonbinding, is an important signal that lawmakers are overwhelmingly opposed to the administration's ham-fisted approach to bolstering U.S. competitiveness.

Unfortunately, the president and lawmakers will likely remain at loggerheads on trade.  It would be more productive for the White House and Congress to seek areas of bipartisan agreement on smaller, less inflammatory issues to improve the U.S. economy.  One such area is reforming the Telecommunications Consumer Protection Act of 1991 (TCPA).  This law, intended to protect Americans from telemarketers, has had the pernicious effect of driving call centers – and jobs – out of the United States.

The TCPA prohibits telemarketers from using automated dialing and pre-recorded messages to call cell phones, residential phone lines, or customers on the "Do Not Call" registry.  However, federal laws and regulations have failed to keep pace with the telecommunications revolution over the past three decades.  Indeed, there have been more than 3,000 lawsuits filed under the TCPA since 2015, affecting companies in more than 40 industries.  As Mark Brennan from the law firm Hogan Lovells notes, these businesses have been "essentially forced to pay out millions in TCPA settlements instead of investing that money into jobs, business operations, infrastructure, or innovation."  Moreover, "a single TCPA lawsuit or settlement can drive small – or even large – businesses to bankruptcy and, in so doing, eliminate key job creators."  With the costs of compliance being so high, some businesses have established call centers outside the United States to escape regulations.

Now, following court decisions that upended key elements of the Federal Communications Commission's previous regulatory framework to implement the TCPA, the FCC is in the process of completely overhauling it.  Lawmakers have offered their vision of how to do so, including a July 24 letter from seven Republicans on the Senate Commerce Committee and a bipartisan July 19 letter from Sens. John Thune (R-S.D.) and Edward Markey (D-Mass.). Moving forward, the FCC should produce a simple and clear regulatory regime that punishes illegal actors, protects good faith communications between businesses and their clients, and helps keep their call centers in the United States.  One estimate shows that the call center industry could grow to as many as 450,000 Americans under such a framework. 

The Trump administration's guiding principle to foreign policy appears to be "Permanent destabilization creates American advantage."  The logic of this approach is uncertain, particularly when it comes to badgering U.S. allies and major trading partners.  With the threat of a hostile Democratic majority on Capitol Hill next year, the White House should abandon populist destabilization and embrace a conservative reform agenda.  This means that instead of launching trade wars, Mr. Trump should build upon his successes to ensure that all Americans benefit from his tax cuts and deregulation efforts, not undercut them.  Doing so is the best way to truly make America great again.

Evan Moore is a foreign policy analyst based in Washington, D.C.

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