Trump’s Tasks: Immigration and Trade

Returning from Davos, the gathering of the global elite who had never before seen fit to invite this exhibitionist television celebrity, familiar with the bankruptcy courts, to eschew Big Macs in favor of canapés for a few days, Donald Trump faces a more demanding test next Tuesday, when he delivers his first State of the Union.

It will certainly be longer than the first such, George Washington’s 1,000 words in 1790, and probably shorter that Bill Clinton’s 1995 1 hour, 25 minute, 9,200-word behemoth. Unless he needs more time to congratulate himself on deregulation, soaring share prices, tax cuts, and other triumphs.

The State of the Union speech is the battleground on which an internecine war is fought, with the warring members of the administration team angling to get “their” sentences read in the hope that it will bind the president to their positions. Mind you, the idea of binding a president who repudiates his own tweets within hours of their issue is interesting, but you can’t blame his staff for trying.

The president will be turning most of his attention for the balance of the week to two domestic issues. The first is immigration and the compromise proposal he put on the table late last week. Fond of surprises (so long as he generates them) Trump entered the lists with a plan he is confident will win the support of the 60 senators required to turn it into law before the February 8 deadline for passage of another spending bill to fund the government.

The president says he would approve offering a path to citizenship for 1.8 million Dreamers-children, now adults, who were brought here illegally by their parents. That’s more than twice the number covered by Obama’s DACA policy. In exchange he wants $25 billion in funding for a border defense system that would include more Customs and Border Protection agents, technology and security at the Canadian border, and the wall-although not the sea-to-shining-sea wall promised during the campaign. The so-called diversity lottery, which makes 50,000 visas available each year to under-represented countries, would be ended. And the family reunification act, which currently allows American citizens to bring in their extended families-Trump calls it chain immigration-would be changed to allow those citizens to bring in only spouses and children.

In essence, Trump is trading legalizing immigrants already here for a greater ability to control future immigration. Which puts it to those who have been expressing so much concern for the future of the Dreamers.

Prospects are less than bright on the Democratic side of aisle: the left needs a mean-spirited Trump piñata to energize its core. Representative Luis Gutierrez, an Illinois Democrat who speaks for an important wing of his party, immediately tweeted his outrage at a plan that “demands a $25 billion ransom for Dreamers with cuts to legal immigration. . . . It doesn’t pass the laugh test.” Which means that he is more interested in preserving the flow of immigrants, and preventing merit-based selection, than securing the bright future for the Dreamers that Trump has on offer.

Senator Heidi Heitkamp, a Democrat from Illinois widely thought to be considering taking on Trump in 2020, called the president’s proposal “input, but it’s input from one person . . . one branch of government.”

Trump will also have some difficulty with Republicans. One told the press that this would so inflame the party’s base that the Democrats would gain control of the House next year and have enough votes to impeach the president. Republicans are aware that he is giving the right to vote to 1.8 million young people likely to become lifelong Democrats. The president said at one point that he would “take the heat” for a decision such as this, and heat he will get.

Then there is trade. Free traders have lost two skirmishes-washing machines and solar panels-and are likely to lose more (aluminum, steel), meaning that temporary stiff tariffs and quotas are being deployed. As a result, there has been much gnashing of teeth by an establishment that has refused to consider the consequences of globalization for working class families.

One reason France’s President Emmanuel Macron and Trump get along so well is that they agree that, when it comes to factory workers, that attention must be paid (to borrow from playwright Arthur Miller). Another is their belief in deregulation, which made Marcon, but unsurprisingly not Trump, the darling of Davos. Trump plans to reciprocate the warm welcome he received from Marcon with the first state dinner he will have laid on.

The real fights are yet to come. One is over NAFTA, the more-or-less free trade agreement between the United States, Mexico, and Canada. A deal is more likely than Trump’s threatened withdrawal from the agreement, especially since farmers (mostly Trump voters) are pressing the president not to ruin one of their most lucrative export markets. Trump is insisting on the inclusion of more American content in vehicles imported from Mexico and an end to the fiction that parts imported into Mexico from China count as Mexican-made for purposes of the agreement. And somehow, Canada’s demand for protection of the rights of indigenous peoples and prevention gender discrimination can probably be accommodated.

The real battle will be with China. Our trade deficit with China has very little to do with “free trade” as that term is generally understood. Indeed, if the deficit were the result of free trade, it would not be particularly relevant to most economists as a matter of policy. But President Xi Jinping is erecting a great protectionist wall around his country. Industries of the future are being subsidized, American firms are being forced to take on Chinese partners and turn their technology over to them, and intellectual property worth $225 billion to $600 billion is being pirated every year. And tariffs block imports-25 percent on autos to China compared with 2.5 percent in America. The latest brick in that protectionist wall is a requirement that Chinese branches of American firms use government Internet networks to communicate with their home offices, saving Xi the trouble of having to hack their communications systems.

Now that China has been caught violating U.N. sanctions and supplying North Korea with oil by mid-ocean transfers, Trump’s illusion that a pleasant dinner at Mar-a-Lago would make Xi an ally against Kim Jong-un has been shattered. His trade representative’s report on IP theft by China is due next August, at which time the president will be able to rely on a 1974 statute to take retaliatory measures.

Which he will, as he more than hinted in Davos. He wasn’t among the international glitterati long enough to be persuaded to abandon Adam Smith’s advice that in a case such as this, retaliation is required.