Here's how Donald Trump could spark a trade war with Mexico and China

Story highlights

  • Donald Trump and Bernie Sanders share some opinions on trade
  • How Trump says he'd deal with China could have a very real effect on the world economy

Washington (CNN)When he rails against Mexico, China and Japan, Donald Trump sounds more like Bernie Sanders than any of his Republican rivals in the presidential race.

As stocks tumble and populist frustration with the political and financial classes grows, Trump is bringing protectionism back in vogue -- making threats to upend trends toward globalization that are decades in the making through the sheer force of his negotiating talents.
    In doing so, he's bucking the modern Republican Party's pro-trade leanings -- and nudging parts of the 2016 field along with him.
    Among Trump's most frequent campaign-trail targets are China and Japan. Those countries are routinely accused of driving down the values of their currencies to give their products price advantages in the United States - one of the reasons Scott Walker called on President Barack Obama to cancel the Chinese president's September visit to the White House, and Marco Rubio is slated to give a speech on China Friday.
    But Trump revealed just how far he wants to go in remaking the American and global economies on Tuesday night in Iowa, when he took aim at another country: Mexico.
    The object of his scorn was a plan by Ford -- a company with factories on six continents -- to invest $2.5 billion in manufacturing there, rather than in the United States. Trump said he'd stop Ford by, in effect, revoking the benefits of NAFTA.
    "I would say to the head of Ford, 'Sorry, I'm not going to approve it,'" Trump said -- and then he announced the leverage he'd use.
    "You're going to pay a tax for every car and every truck and every part that comes across that southern border. You're going to pay a 35% tax, OK?" Trump said. "That's what's going to happen."
    Tariffs and duties like Trump is threatening were repealed when President Bill Clinton signed the landmark North American Free Trade Agreement in 1993.
    Repealing it isn't practical, since pro-trade Republicans control the House and the Senate. However, a President Trump could find ways to pull back on NAFTA. He could appoint members to the International Trade Commission who would vote to slap duties -- steep ones -- on Mexican products, and he could tap a U.S. trade representative who agrees with his views.
    There could be severe consequences. Such moves would invite a trade war that would lead to Mexico retaliating with tariffs of its own, interrupting economic flows that have developed over the last two decades. Against-the-currents moves by the United States could lead major companies to move operations to countries more hospitable to globalization.
    Still, rolling back NAFTA would be a dream come true for some liberals like Sanders, the Vermont independent senator who is challenging Hillary Clinton for the Democratic party's presidential nomination.
    Opposing elements of NAFTA is not the only position Trump and Sanders share.
    Japan is the most important new market for the United States in the ongoing negotiations over the 12-nation Trans-Pacific Partnership -- which would supplant NAFTA as the biggest free trade deal in history.
    Democrats like Sanders, and some tea party Republicans, are highly critical of the Pacific Rim negotiations, with Japanese autos remaining one of the major sticking points. Trump, too, has railed against the deal. But most Republican candidates, like Jeb Bush, have supported it. And while Hillary Clinton has avoided staking out solid ground on the deal, she praised it while serving as President Barack Obama's secretary of state.
    On China, Sanders and other members of both parties have howled for years that the country is manipulating its currency, and consider the Asian giant an antagonist at the trade negotiating table. The two countries have squared off repeatedly in trade disputes over tires, solar panels, rare earth minerals and more.
    With China's economic slowdown driving a drop in stock prices worldwide, Sanders used the moment to weigh in Monday on free trade more broadly.
    "The results are in," he tweeted. "Unfettered free trade has been a disaster for working Americans. It is high time we ended our disastrous trade policies."
    Trump offered a similar take Tuesday night in Iowa, saying: "Whether it's China or Japan or Mexico, they're all taking our jobs, and we need jobs in this country. It's enough, what we're doing with foreign trade."
    Walker, the Wisconsin governor, tried to snag some attention by taking his own shot at China, saying Obama should call off Chinese President Xi Jinping's September visit to the White House.
    "Given China's massive cyberattacks against America, its militarization of the South China Sea, continued state interference with its economy, and persistent persecution of Christians and human rights activists, President Obama needs to cancel the state visit," Walker said in a statement. "There's serious work to be done rather than pomp and circumstance. We need to see some backbone from President Obama on U.S.-China relations."
    While candidates like Walker are weighing in of late, the comparisons between Trump and Sanders run deeper. Sanders' campaign is steeped in anti-Wall Street rhetoric. Trump, meanwhile, is attacking hedge fund managers, who he says contribute nothing to the economy.
    Trump acknowledged their similarities on trade earlier this month on MSNBC, pointing to a Sanders speech.
    "I said, 'you know, I think I can take that paragraph and just use it in my speech,'" he said.
    By echoing each others' critiques of trade deals, Trump and Sanders are bridging a gap between both parties' working-class elements -- leaving establishment candidates in the middle.
    Sanders has eschewed the comparison, noting that the two agree on little else. Trump, meanwhile, said the difference is that Sanders wouldn't do anything about it -- but he would.
    That, he said, is where his friends-turned-negotiators on Wall Street come in.
    "I have people that are so nasty, so mean, so horrible, nobody in Iowa will want to have dinner with them," Trump said.
    "It's true. They're horrible human beings, I admit it," he said. "They're Wall Street killers. ... But they're the greatest negotiators in the world. I know the best."
    For all his attacks on U.S. trade policies, Trump said he favors trade in principle.
    "I'm a free trader -- I believe in free trade, right? I like free trade. I like free trade," he said, as if to convince the crowd he'd meant what he'd said.
    "But free trade's only good if you have smart representatives," Trump said, adding a plug for his book on negotiating. "It's not good if we have dummies. It's not good if our leaders are incompetent. It's not good if they haven't read 'The Art of the Deal.'"