The Economist: Peter Navarro, the jailed economist with power over Trump policy

The Economist
Former president Donald Trump’s former favourite — lead economic advisor in his first administration — could once against hold economic policy sway.
Former president Donald Trump’s former favourite — lead economic advisor in his first administration — could once against hold economic policy sway. Credit: The Nightly

Ahead of America’s election in November, company bosses, financiers and diplomats are busy calling on Donald Trump’s allies, trying to divine the economic policies the former president will pursue if he is re-elected.

But there is one man in Mr Trump’s orbit who holds more sway than most and who, for now, is virtually inaccessible. That is because he is inmate number 04370-510 in the Federal Correctional Institution of Miami.

Peter Navarro, a leading economic adviser in Mr Trump’s first administration, is more than halfway through a four-month sentence for contempt of Congress. He bristles with indignation at the justice system, disdains Joe Biden’s record and longs to steer America towards hardline protectionism.

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In written correspondence with The Economist, Mr Navarro has laid out how he thinks Mr Trump should approach trade — from turning up the heat on China to slapping tariffs on just about everyone else.

It is a dark, angry vision for the global economy. As polls stand, it is one Mr Navarro may shortly be able to promote from inside the White House.

Amid the chaos of the previous Trump administration, Mr Navarro stood out as especially disruptive, acerbic and vengeful. At various points, the former economics professor was sidelined from trade negotiations, investigated for abusing colleagues and publicly castigated.

But throughout it all Mr Navarro managed to remain in Mr Trump’s favour. His position was only bolstered after he demonstrated complete loyalty by refusing to comply with a subpoena from the House of Representatives committee investigating the Capitol riot of January 6th 2021. It was that refusal that landed the wiry 74-year-old in prison in March.

To gauge the influence of Mr Navarro’s ideas, consider how Mr Trump has praised his latest book. The New MAGA Deal is due out on July 16th, coinciding almost perfectly with its author’s release from prison.

“What he says should be highly respected,” reads a dustjacket quote from Mr Trump. “Peter Navarro is a Patriot who has been treated very badly, but he continues forward. In the end, there will be Victory!”

Back in 2016 Mr Navarro’s appeals for protectionism made him an outlier, even among Republicans. Now he is much closer to the mainstream, as shown by Mr Biden’s recent decision to slap hefty tariffs on Chinese electric vehicles (evs), solar panels and more.

It is the triumph of “the Trumpian principle that economic security is national security”, says Mr Navarro. “The debate is over.”

Peter Navarro was found guilty of contempt of Congress for refusing to turn over documents. (EPA PHOTO) Credit: EPA

Not that he has anything nice to say about Bidenomics. In Mr Navarro’s view, Mr Biden messed up by making industrial policy heavy on subsidies for evs. Not only did that “spike the federal deficit” in America, it also, perversely, encouraged China to produce more ev batteries.

If Trump had been president, this never would have happened.

Peter Navarro

As with many of Mr Navarro’s claims, this is highly debatable: Mr Biden’s subsidies require battery components to be made in America or by free-trade partners, and Mr Trump’s tax cuts add even more to the deficit. But it is true that Chinese producers dominate the global ev market, and that they are investing abroad in a bid to dodge American tariffs.

Mr Navarro’s prescription is to prevent third countries from being used as conduits for Chinese goods.

“Vietnam is a major shadow export platform for ‘Made in China’ and invites a crackdown,” he said.

He also warns that Mexico may imperil the free-trade agreement between it, America and Canada if it accepts too much Chinese investment.

“Mr Trump simply won’t tolerate a Communist Chinese beachhead on America’s southern flank,” he said.

One way Mr Biden has distinguished his trade strategy from Mr Trump’s is by trying to mend ties with allies, to form a united front against China.

Some diplomats still complain that Mr Biden’s policies boil down to the same favouritism for America, albeit via subsidies rather than tariffs and couched in politer language. But Mr Navarro’s harsh analysis is a bracing reminder that the differences are substantial.

“Too many European nations are compromised by Communist Chinese influence to ever project a united front,” he said.

Britain? Addicted to Chinese capital. Greece and Italy? Their ports are mortgaged to China. Germany? Too dependent on China for its exports. In Mr Navarro’s Manichaean universe, Trumpian America stands alone in its righteousness.

Even leaving China aside, Mr Navarro considers America a victim.

“When it comes to steel and aluminium, the US has no allies, only competitors that cheat and dump,” he said. (The suggestion is that, as president, Mr Trump might consider reinstating his controversial steel and aluminium tariffs, rolled back by Mr Biden.)

Mr Navarro also hopes to see passage of the Reciprocal Trade Act, which would allow the president to mirror the tariffs and non-tariff barriers of any country that refuses to lower its own to the level of America’s.

He calls it common sense and a priority for Mr Trump. As for the World Trade Organisation (WTO), rendered increasingly irrelevant by America’s crippling of its appellate body, Mr Navarro’s solution is simple: boot out China, for breaking the wto “with its ruthless economic aggression”.

In practice, many of these proposals would be hard to implement and could harm America.

Steel tariffs are costly for the many industries that use the metal, and so end up hurting, not helping, domestic manufacturers.

Screening Chinese investments abroad would be both arduous and awkward, requiring explicit meddling in other countries’ politics.

Reciprocal tariffs may sound sensible but would leave American policy looking bizarre, since each country has a blend of high and low tariffs for different sectors (which in fact allows for the compromises that make most trade deals possible). America, for instance, has hefty levies on imports of pickup trucks and lumber. Expelling China from the WTOwould be nearly impossible.

But focusing on such details may miss the point.

When Mr Trump was in the White House, Robert Lighthizer, a lawyer who served as United States Trade Representative, helped design America’s new tariffs and spearheaded the investigations that formed their legal basis.

“Lighthizer was more the brains of the operation, whereas Navarro was the heart and the gusto, the front-line warrior willing to get sullied and dirtied,” Dan Ikenson, a trade-policy scholar, said.

Mr Navarro’s main official role was to lead the Office of Trade and Manufacturing Policy in the White House, a body created by Mr Trump with few actual staffers.

Some speculate that Mr Lighthizer may be treasury secretary if Mr Trump is re-elected, a perch from which he could remake American economic policy beyond just trade. Mr Navarro, by contrast, is not much of a manager. But his pugnaciousness appeals to Mr Trump.

Last month Mr Trump told the Wall Street Journal that he would “absolutely have Peter back” in a new administration.

Another sign of Mr Navarro’s good standing: Donald Trump Junior, the former president’s son, recently visited him in prison.

Located at the southern tip of Miami, his low-security jail sits next to the municipal zoo and not far from a safari park.

That may sound pleasant as far as detentions go, but it is still prison, with a strict curfew, restrictions on movement and little privacy in a dorm-style room.

In late May there was a bloody brawl between Puerto Rican and Mexican gangs in the prison directly next to Mr Navarro’s. “It is no country for old men,” he observes.

The only thing that seems to exercise Mr Navarro more than China’s mercantilism is his belief that the Democratic Party is using the legal system to persecute Mr Trump, conspiring to prevent him from regaining power. He describes the hush-money trial that ended last month with Mr Trump’s conviction as a ploy to exhaust his funds and keep him tied up in court instead of on the campaign trail.

Under Joe Biden’s lawfare tyranny, America is nothing more than a banana republic and the world, particularly Communist China, is laughing at us.

Peter Navarro

That makes for quite the contrast with Republicans’ more usual depiction of Mr Biden as a doddering fool. Like many of Mr Navarro’s extreme views, this one has scant basis in reality.

But one thing is all too clear: no one should be laughing at him, or the prospect of his ideas once more holding sway in the White House.


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