Navarro, pictured in June at a Trump rally in Duluth, Minn., is viewed as an outlier by his fellow economists
Tom Brenner—The New York Times/Redux
By Molly Ball
August 23, 2018

If Peter Navarro ever doubted that he was a Democrat, a look at the other side was enough to convince him. Republicans talked about virtue and prosperity, but they were really a bunch of greedy, intolerant hypocrites, he thought.

The “insufferably bigoted, close-minded, and dangerously well-disciplined storm troopers on the religious right,” he wrote in a 1998 memoir, San Diego Confidential, “wield far too much influence at the ballot box.” The GOP was in thrall to “buffoons, sociopaths, and zealots like Rush Limbaugh, Newt Gingrich, and Ralph Reed.” Its economic policies consisted of “tax schemes to further enrich the rich,” and its leaders could not be trusted “to do anything but trash the environment under the phony banner of economic progress.”

Twenty years ago, Navarro was a liberal economist who admired Hillary Clinton, argued for taxing the rich and had run for office as a Democrat four times. Today he is a top economic adviser to a Republican President. As Donald Trump’s director of trade and industrial policy, Navarro is known for his advocacy of tariffs and opposition to trade deals. It is Navarro who has pushed Trump to wage an escalating trade war that pits the U.S. against not only economic adversaries like China but also allies like Canada and the European Union. He is the most powerful person in Washington on the most volatile issue of Trump’s presidency.

Navarro’s positions put him at odds with most economists, most Republicans and many in the business community. But they are in sync with the President’s long-standing conviction that the U.S. is being ripped off by other countries. “Trump listens to Peter, especially when it comes to China,” says Stephen Moore, a fellow at the conservative Heritage Foundation, who frequently advises Trump and who disagrees with the tariff push. It is Navarro who helps translate Trump’s beliefs into action, supplying him with policy direction, affirmation and arguments to help his case. His role is akin to that of Trump’s senior policy adviser, Stephen Miller, who has become notorious for pushing Trump toward the restrictionist immigration policies he instinctively favors. Navarro, though less well known, is the Miller of economic policy, the voice in Trump’s ear that eggs him on against the experts.

His power has grown in recent months. Navarro, 69, won a formal promotion in February. Most of his free-trade opponents on Trump’s economic team have left the Administration. The U.S. has moved aggressively to implement his preferred policies, imposing wide-ranging tariffs on billions of dollars’ worth of imported goods. “Trump wants to do protectionism, and when almost everyone in the room is saying, ‘We cannot do that, it’ll destroy the economy,’ he’ll say, ‘Where’s my Peter? What does Peter think?'” says a prominent conservative trade expert. “The President looks for validation, and the folks keeping the devil off his shoulder have disappeared.”

Trump’s tariffs have drawn retaliatory actions and jolted the markets. They have also created diplomatic headaches, complicating relations with America’s closest allies. Most economists believe that in the long run, Navarro’s vision would cause a major hit to the U.S. economy, with rising inflation, bankrupt farms and businesses, and thousands of lost jobs. “There is a lot of evidence that inward-looking economic policies that isolate a country from the rest of the world are bad for that country,” says Greg Mankiw, a Harvard economist who chaired the Council of Economic Advisers under President George W. Bush. “You could make a list of the 100 most prominent economists in the world, and Peter Navarro wouldn’t be on it. His views are very, very far from the mainstream.”

As the trade debate rages, the policy’s architect remains something of a mystery. How did Navarro, a Democrat whose philosophy was formed by environmentalism and anti-corporatism, become the man behind Trump’s trade war?

 

Peter Navarro originally set out to be a politician, not just an adviser to one. But he had a problem: people didn’t like him. “He had this burning desire to be important, to be in charge,” says Larry Remer, a San Diego–based Democratic consultant who managed Navarro’s campaigns. “He was right about a lot of things. But he was just an a–hole.”

Born in Massachusetts, Navarro grew up in Florida and Maryland, raised by his mother, a secretary, after her divorce from his father, a musician. The family was working-class. In high school, Navarro was a self-described “latchkey kid” who worked multiple jobs and slept on a sofa in a one-bedroom apartment. He earned an academic scholarship to Tufts University, then spent three years in Thailand with the Peace Corps.

Idealistic but adrift, Navarro found his calling in economic policy. While pursuing his Ph.D. at Harvard, he wrote his first book, The Policy Game, a screed against the “special interests” he charged with “stealing America.” He argued strongly against protectionism, saying tariffs hurt consumers, threatened global stability and could lead to a trade war that caused an “unstoppable downward spiral by the entire world economy.”

After receiving his doctorate, Navarro moved to Southern California, where he eventually became a professor of economics and public policy at the University of California, Irvine. His involvement in San Diego politics started with his opposition to developers, whom he saw as greedy despoilers of the environment. In his memoir, Navarro called them “punks in pinstripes” and argued that their plans would ruin the port city’s character. He formed an anti-growth organization called Prevent Los Angelization Now, and attempted to parlay his activism into elected office.

Navarro hadn’t always been a Democrat. Before running for office, he had been registered as both a Republican and an independent, and in his writing he professed concern that Democrats waste taxpayers’ money. But he was, he wrote, “a strong environmentalist and a progressive on social issues such as choice, gay rights, and religious freedom.” While Republicans seemed to “prefer the ‘every man for himself’ approach,” Navarro believed “we ought to progressively tax the rich to help everybody else.” By the time of his first campaign, in 1992, he was sure he belonged in the Democratic Party.

Navarro won the Democratic primary for San Diego mayor on his first try. He was ahead in the polls for the general election when he ran an ad attacking his Republican opponent, Susan Golding, for her ex-husband’s conviction on drug-money-laundering charges. But Golding turned the tables, portraying herself as the victim of a smear campaign. Navarro’s fate was sealed when, in their final debate, she tearfully recounted the pain Navarro had caused–while he smirked.

After losing the mayoral race, Navarro ran for city council in 1993 and county board in 1994, losing both races. Undeterred, he ran for office again in 1996, this time for a seat in the House of Representatives held by Brian Bilbray, a first-term Republican swept into office by the Newt Gingrich revolution. Opposition to Gingrich–who is today a major Trump ally–was the poll-tested theme of Navarro’s campaign. He decried Gingrich’s agenda, which he described as “anti-choice, anti-environment, anti–working people and anti-Medicare,” and his slogan was The Democrat Newt Gingrich fears most!

Navarro got a three-minute speaking slot at the 1996 Democratic convention in Chicago. President Bill Clinton, the First Lady and Vice President Al Gore all came to California to fundraise and campaign for him. In a memoir, Navarro singled out “street-smart, savvy” Nancy Pelosi for praise, but Hillary was his favorite: “gracious, intelligent, perceptive, and, yes, classy,” he called her, expressing puzzlement that many Americans seemed to hate her. “Okay, so … this uppity woman has made it all too clear to Middle America that she’d rather be an activist first lady than rearrange White House furniture,” he wrote. “But so what? This is the dawn of the 21st Century.”

Navarro lost by 11 points. The campaign left him ruined and embittered: his wife, discomfited by public life, had divorced him, and he was deep in debt. Looking around, he saw plenty of people responsible for his defeat, from Bill Clinton to the local media to dirty campaign tricks to the “poorly informed voters who ultimately determine elections.” His book San Diego Confidential named names and spewed insults. But he knew he bore some of the blame. In focus groups, voters found him harsh, arrogant and angry. “It’s like everything is a war with him,” one woman said. It was his personality, not his policies, that turned off voters, says Remer, who is puzzled by Navarro’s current position. “The Peter I knew,” he says, “would have had to swallow a lot to do what he’s doing with Trump.”

Hillary Clinton campaigned for Navarro in 1996, the year he ran for Congress as a progressive Democrat
John Gastaldo—TNS/Zuma

So what happened to Peter Navarro, liberal warrior? In the ensuing decades, he would make one more unsuccessful run for elected office, losing a 2001 campaign for San Diego city council. He was a supporter of Democratic politicians as recently as 2008, when he backed Hillary Clinton in the presidential primary. In op-eds and newsletters in the past decade, he called for an aggressive climate policy, including a carbon tax and a ban on incandescent bulbs, and supported a stimulus package to combat the financial crisis.

But on trade, his views evolved. In 1998, he had written that he “strongly supported free trade.” But after China joined the World Trade Organization (WTO) in 2001, he started to notice that his MBA students were losing their jobs despite their sterling qualifications. He concluded that China’s trade practices–including export and production subsidies, currency manipulation and theft of intellectual property–were putting Americans at an unfair disadvantage. In other words, Navarro seemed to see in China a scapegoat for people like himself: well-credentialed Americans denied access to the success they felt they’d earned.

He wrote his first book on the phenomenon, The Coming China Wars, in 2006, followed by 2011’s Death by China and 2015’s Crouching Tiger. Death by China was made into a documentary narrated by Martin Sheen. And it attracted the attention of then businessman Trump. “I urge you to see it,” he wrote in a promotional blurb. When Trump ran for President, Navarro heard a politician willing to take on the evils of globalism, foreign influence and China–someone who, like Navarro, was convinced America was getting screwed.

Most economists disagree with this view. They agree that China’s entry into the WTO led to a period of “China shock” for the U.S. economy as a flood of cheap imports displaced American goods such as clothing, furniture, toys and electronics, leading to a sharp decline in manufacturing jobs. But experts generally believe that the shock wore off and trade with China has been a net benefit to the U.S. for the past decade or so, lowering consumer prices and opening a huge new market to American companies. Many agree with Navarro that China’s state-managed economy engages in unfair practices. But virtually no economists believe tariffs are the solution. “It’s a trillion-dollar coin toss,” says Douglas Holtz-Eakin, a conservative economist and former director of the Congressional Budget Office. “It’s a very risky approach.”

Economists may disdain Navarro, but plenty of Americans agree with him, as the 2016 election showed. Both Trump on the right and Bernie Sanders on the left tapped into populist opposition to foreign trade deals. In one 2016 poll, 68% of Americans said they’d rather have an American factory that created 1,000 jobs than a Chinese-owned factory that created 2,000 jobs in their community.

Navarro joined Trump’s campaign as an economic adviser in 2016. But in the White House, Trump was initially surrounded by free traders who sought to dissuade him from imposing tariffs and pulling out of global agreements such as NAFTA. Republicans in Congress pushed Trump to focus his energies on tax cuts rather than duty hikes. The internal debate was contentious, with screaming matches in the Oval Office and bureaucratic fights behind Trump’s back. For the first year, the “globalists” seemed to prevail, marginalizing Navarro, who was reportedly excluded from many top-level strategy meetings and required to copy chief economic adviser Gary Cohn on all his emails.

Two key departures in early 2018 changed the equation. Staff secretary Rob Porter, a strong advocate of free trade, resigned in February amid accusations of domestic violence. Cohn followed him out the door in March after Trump insisted on moving forward with tariffs on steel and aluminum. “For a long time, Navarro was put in a closet where he couldn’t do any harm,” says Tony Fratto, a former Treasury Department official under George W. Bush. “But when Gary stepped down, it left a huge hole for him to run through, and he was pushing on an open door, because Trump has believed these things for years.”

Out of Trump’s earshot, Navarro is as abrasive as ever, berating and demeaning those he disagrees with and working aggressively to block contrary views from reaching the President, according to three sources in and outside the Administration. As for how the onetime environmentalist who deplored greedy corporations feels about working in a White House that has rolled back environmental regulations and enacted a massive corporate tax cut, it’s not clear. Navarro declined to be interviewed for this article. His most recent writings give few hints to his current views. Some of his past concerns are still evident: in Death by China, Navarro blasts greedy corporations for putting their profits ahead of jobs for American workers, and he criticizes China for polluting the environment. Navarro’s allies argue that traditional economic analyses fail to account for the destruction free trade can wreak on people’s lives. “We lost the trade war decades ago,” he told Axios in June, “once we entered into NAFTA and let China into the WTO.”

 

The results of Navarro’s influence on trade are evident. China, Canada and members of the E.U. have imposed retaliatory tariffs on hundreds of billions of dollars’ worth of American goods, leading to warehouses full of excess meat and a giant surplus of dairy products. The price of soybeans has plummeted, while the prices of some washing machines are up by 20%. Auto prices could soon follow. The nation’s only major television manufacturer, Element Electronics, announced it would close its factory and lay off 126 workers because of the rising price of Chinese components.

Conservative economists like Moore hope that tariffs are merely a means to an end, giving Trump leverage to negotiate deals that would result in freer markets. “In my discussions with Donald Trump, it’s been about using the tariffs as a bargaining tool,” Moore says. “In the end, he wants to get to zero tariffs.”

But Navarro has a different view. He advocates a permanent regime of tariffs, barriers and quotas to “balance” the trade deficit, discourage imported goods and encourage domestic manufacturing. The Administration’s actions, as opposed to its rhetoric, are moving in that direction. The renegotiated U.S.-Korea trade agreement that was announced in March would extend a 25% tariff on South Korean trucks for 30 years. NAFTA talks have reportedly stalled because U.S. negotiators are demanding that autos be built with 70% American steel to qualify for duty-free treatment. At the WTO, the U.S. is blocking judicial appointments to win freer rein to impose anti-dumping duties. In Senate testimony in July, Robert Lighthizer, the U.S. Trade Representative, acknowledged that the Administration was not seeking zero tariffs with the E.U.

Trump appears to like where all this is headed. “Tariffs are working big time,” he tweeted on Aug. 5, adding that the duties would enable the U.S. to begin paying off the $21 trillion national debt. Economists mocked the notion, but White House sources say it is an argument Trump gets directly from Navarro.

All this has alarmed conservatives in Congress. “I don’t think the Administration even fully knows what its trade policy is,” says Republican Senator Bob Corker, who has proposed a bill to curb Trump’s steel tariffs. “They just wake up in the morning and make it up.” GOP lawmakers, CEOs and policy mavens have paraded through the White House in a bid to persuade Trump to change course. Trump has waved them all away. He is sensitive to the idea that the rural whites who comprise his political base might not like tariffs. In July, he announced a $12 billion agricultural bailout. But he’s convinced he won’t lose their votes. At a July 31 rally in Florida, he lamented the effects of China’s actions on farmers but said they were willing to bear the pain. “Our farmers are true patriots,” Trump said. “And you know what our farmers are saying? ‘It’s O.K., we can take it.'”

Back in the 1990s, Navarro lamented Republicans’ appeal to these types of voters. They relied, he wrote, on the “fear-mongering trinity” of crime, illegal immigration and affirmative action to get the votes of “frightened seniors and white-and-angry blue-collar men.” One such politician was then California governor Pete Wilson, who was contemplating a run for President.

Navarro issued a stark warning. “This man without core beliefs,” he wrote, “wants to cynically ride a tidal wave of white male rage and anti-immigrant fervor right down the Potomac and into the White House.” Even then, he saw how well it could work.

This appears in the September 03, 2018 issue of TIME.

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