Begun, the trade wars have

(Jabin Botsford/The Washington Post)

As Donald Trump inches ever so closer to Inauguration Day, the Republican Party’s multilateral free-trade consensus continues to fall apart. Public opinion polling has already charted this shift among Republicans (though not, it should be stressed, among the overall American public).

Now it’s affecting elected GOP officials as well:

Some commentators think that Trump’s pronouncements have as much staying power as Snapchat photos, but trade policy is an area where I don’t think this assumption holds at all. From Trump’s Twitter feed over the past 24 hours:

Indeed, Trump’s latest staffing announcement makes his preferences on this subject pretty clear. From the Wall Street Journal:

Donald Trump will name Robert Lighthizer, a former trade official under President Ronald Reagan, to head the U.S. Trade Representative office . …

Mr. Trump has signaled a major shift in policy, threatening China and Mexico with tariffs if they don’t right alleged trade wrongs. That could carve out a new role for the trade office, compared with under previous presidents.

Mr. Lighthizer has three decades of experience arguing for punitive tariffs on overseas companies. Given Mr. Trump’s deep skepticism of trade agreements such as the North American Free Trade Agreement, or NAFTA, Mr. Lighthizer probably wouldn’t prioritize major new trade agreements, at least in the early days of the administration, according to people following Mr. Trump’s trade plans.

Over at the blog Marginal Revolution, Tyler Cowen concludes, “None of this is good news.” And indeed, a quick perusal of some of Lighthizer’s congressional testimony suggests efforts to pursue a more mercantilist trade policy are coming.

Unlike many areas where Trump has no theory for what to do, his approach to trade is actually quite clear: Multilateral trade deals are not as good as bilateral trade deals, enforcement and threats will bring countries like China into line, and threatening U.S. corporations with overseas investments will improve the balance of trade.

Assuming that his team executes this strategy as cleverly as possible — and I have serious doubts. It is worth remembering three flaws with it:

1. Fifteen yeas ago, the Bush administration tried the bilateral trade deal approach as a bargaining tactic to get the Doha Round trade negotiations to move in a more U.S.-friendly direction. Some significant and some not-so-significant deals were signed. None of it, though, affected either the Doha Round or the larger terms of trade.

2) The approach to China feels about a decade out of date. Furthermore, the combination of China’s economic weakness and Chinese President Xi Jinping’s growing grip on power will make any aggressive measures by a Trump administration the perfect excuse to go down a very tempting nationalist path.

3) Multinational corporations, such as General Motors, care about pleasing the incoming administration, but only to a point. GM’s overseas markets matter more than the American market. And there’s a big trade-related reason that they located a production facility in Mexico. From the Motley Fool:

It’s about this: Mexico has free-trade agreements with over 40 countries.

That’s important. A company that exports from Mexico has duty-free access to markets that cover about 60% of the world’s economic output, according to the Wall Street Journal. Put another way, because they don’t have to pay import duties, automakers exporting from Mexico to these markets can lower their retail prices, take more profits, or both.

In other words, it’s a big competitive advantage. And it’s one that more and more automakers are looking to get.

So unless the Trump team plans on quickly negotiating similar duty-free access with other large economies, I have my doubts about this strategy working very well. At all.

One of the great natural experiments of the Trump administration will be to see whether the coming wave of deregulation, tax cuts and potential fiscal stimulus to prime the pump will outweigh the effects of higher trade barriers and interest rates. As I’ve said before, I fear this will lead primarily to more trade and capital controls.