In May of 2015—before Donald Trump ever announced he was running for president—the International Monetary Fund declared that China had stopped devaluing its currency to gain an unfair trade advantage. Team Trump final has finally agreed.
“There’s no question they have manipulated their currency,” Treasury Secretary Steven Mnuchin said at this week’s glitzy Milken Institute conference in Los Angeles, referring to some unspecified time in the past. “Right now, they’re using their reserves to go in the other direction.” That’s right: China has been boosting the value of its currency, while Trump insisted it was doing the opposite.
A matter of semantics, some might argue, except that one at a time, Trump’s economic team has been walking back Trump’s more outlandish claims on the economy, while dissuading him from acting on his most disruptive campaign promises. And here at the Milken Conference—attended by hundreds of the nation’s business and financial titans—Trump’s economic envoys have done much more to calm elites worried about trade wars and self-defeating protectionism than to alarm them (as Trump often does).
Mainstream views for a change
At least four Trump cabinet secretaries—Mnuchin of Treasury, Wilbur Ross of Commerce, Besty DeVos of Education and Elaine Chao of Transportation—are making the rounds at the Milken confab, often bumping into fellow 1 percenters they’ve done business with before. Mnuchin and Ross, charged with handling Trump’s policies on tax reform and trade, were chatty and humorous in their public appearances here, compared with the stern visage both strap on when addressing news conferences inside the Beltway.
Perhaps because they’re among friends, their message on the economy was more mainstream and reassuring than the jarring storylines that often emerge from the White House, such as the recent revelation that Trump was a pen stroke away from eviscerating the North American Free Trade Agreement, talked out of it only by urgent phone calls from the leaders of Mexico and Canada.
Ross talked in detail about Trump’s plan to revise or revoke NAFTA, a campaign pledge that causes corporate America a great deal of heartburn, since it might unravel supply lines put in place over more than two decades. Ross indicated that he understands the concern, and hopes to alleviate it.
“My biggest priority is getting NAFTA on the right foot,” Ross told Yahoo Finance Editor-in-Chief Andy Serwer. “A lot of the anxiety people in America have under new trade regimes will go away if we can bring NAFTA to a satisfactory conclusion without a trade war, without recriminations.” In other remarks, he indicated that getting Mexico, China, Japan and other countries to buy a bit more American stuff might be sufficient grounds to declare success and move on.
Mnuchin, while summarizing the Trump administration’s overall economic goals, didn’t mention Trump’s target of 4% economic growth. That has been knocked back to 3%, and even that won’t be coming soon. “In our projections, it will probably take 2 years to get up to 3%.” Backpedaling, maybe, but that’s also more realistic, given countervailing trends such as an aging population and a giant federal debt.
The other big item on Trump’s economic agenda is tax reform, and Mnuchin tried to convince skeptics that, despite appearances, the White House and Congressional Republicans stand on much common ground. “We absolutely share the same vision,” he said. “On 80% of the details, we’re in agreement. The other 20% we need to work through.” As cheering as that might sound, it’s worth pointing out that the 20% involves the toughest part of tax reform—figuring out where to come up with new revenue. Then again, if things are going as swimmingly as Mnuchin insists, maybe Republicans will cross the finish line, hand-in-hand, within a few weeks.
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Rick Newman is the author of four books, including Rebounders: How Winners Pivot from Setback to Success. Follow him on Twitter: @rickjnewman.