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Divisive policies will harm Trump’s plans to grow economy

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(FILES) This file photo taken on December 1, 2016 shows US President Donald Trump(R) and US Vice President-elect Governor Mike Pence during thier visit to the Carrier air conditioning and heating company in Indianapolis, Indiana. US manufacturing activity expanded in January for the fifth consecutive month as production, employment and prices all improved, and orders held steady, the Institute for Supply Management said on February 1, 2017. The ISM manufacturing index rose 1.5 points to 56 percent -- the highest since November 2014 -- with a strong majority of the industries surveyed reporting growth. / AFP PHOTO / TIMOTHY A. CLARYTIMOTHY A. CLARY/AFP/Getty Images
(FILES) This file photo taken on December 1, 2016 shows US President Donald Trump(R) and US Vice President-elect Governor Mike Pence during thier visit to the Carrier air conditioning and heating company in Indianapolis, Indiana. US manufacturing activity expanded in January for the fifth consecutive month as production, employment and prices all improved, and orders held steady, the Institute for Supply Management said on February 1, 2017. The ISM manufacturing index rose 1.5 points to 56 percent -- the highest since November 2014 -- with a strong majority of the industries surveyed reporting growth. / AFP PHOTO / TIMOTHY A. CLARYTIMOTHY A. CLARY/AFP/Getty ImagesTIMOTHY A. CLARY/AFP/Getty Images

President Trump has promised annual economic growth of 4 percent.

I’d settle for anything above zero.

Doubling the growth rate for the country’s gross domestic product, our annual output of goods and services, was always going to be challenging. Trump’s first couple of weeks make it look like a fairy tale.

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Instead of using his political capital to advance the most ambitious parts of his economic agenda — corporate tax reform and spending $1 trillion to rebuild roads and highways — Trump has so far focused on divisiveness: building a wall along the Mexican border financed by import taxes, and blocking entry into the United States for 90 days for citizens of seven predominantly Muslim countries: Iran, Iraq, Libya, Somalia, Sudan, Syria and Yemen. He is also reportedly considering restricting the H-1B visa program that allows highly skilled foreigners to work in the United States.

“His trade plan is not growth enhancing,” said Giacomo Santangelo, a professor of economics at Fordham University in New York. “And reducing people coming into the country just means reducing domestic production and the size of the consumer market.”

There’s no doubt that Trump is making good on some of his campaign pledges. But from an economic viewpoint, his list of priorities is backward, Santangelo said. Tax reform and infrastructure spending will add measurable growth to the economy. Vague promises on getting better trade deals with China and Mexico, and ambiguous orders on repealing the Affordable Care Act will not.

Even before Trump took office, the country was facing economic challenges. China’s economy has slowed, Latin America, especially Brazil, looks very shaky, and Europe remains stagnant — all of which impact the U.S.

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As John Williams, president of the Federal Reserve Bank in San Francisco, recently told me, the Fed has done all it can do to help the economy after keeping interest rates near zero and buying trillions of dollars of government debt. It’s time for the politicians, not the Fed, to take charge of the economy, he said.

That means Trump and Congress need to act. But even though the Republican Party controls two branches of government, it will need support from Democrats to pass corporate tax reform and a sweeping infrastructure bill. A major revision of the tax code will draw fire from lobbyists and special interest groups of every size and kind, especially if it adds to the deficit. And as for fixing roads and bridges, fiscally conservative Republicans, especially in the House of Representatives, will balk at borrowing billions of dollars to foot the bill.

Rewriting trade deals and reaching new ones will also require congressional approval and bipartisan support. Even columnist and University of Maryland Professor Peter Morici, one of the few prominent economists to back Trump during the campaign, said the president needs support beyond his own inner circle.

“As businessmen, (Trump and his economic team) were great at exploiting the system,” Morici, a former chief economist for the

U.S. International Trade Commission, recently wrote, “Now they must try their hands at accomplishing radical systemic reform and need cooperation from Congress and foreign governments, where leaders have ideas of their own and can’t be fired by Mr. Trump.”

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Of course, it’s early in Trump’s presidency. He has plenty of time to attend to infrastructure or tax reform. And few economists are willing to predict a recession at this point. (Should that occur soon, Trump would become the first president in nearly 70 years who didn’t inherit a severely weak economy to see a decline during his first year of office.)

Jerry Nickelsburg, a professor of economics at UCLA’s Anderson School of Management, said the economy does not have the kind of imbalances (too much money in one asset like housing or tech stocks) that have preceded the last two economic downturns.

But Trump’s rhetoric on free trade combined with his clumsy orders on immigration and repealing the Affordable Care Act have certainly put economic growth at risk, Nickelsburg said.

Trump’s immigration order, in particular, could hurt vital industries like tourism and higher education by discouraging people from taking vacations or attending school in the United States. Tourists and students, after all, spend a lot of money on goods and services.

And major geopolitical events like a trade war with China or military conflict with Iran or North Korea could further retard global growth.

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In his quest to appease his most ardent supporters, Trump seems to be squandering his best chance at meaningful economic reform meant to help them.

Thomas Lee is a San Francisco Chronicle columnist. Email: tlee@sfchronicle.com Twitter: @ByTomLee

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Thomas Lee is a business columnist for the San Francisco Chronicle. He is the author of “Rebuilding Empires,” (Palgrave Macmillan/St. Martin’s Press), a book about the future of big box retail in the digital age. Lee has previously written for the Star Tribune (Minneapolis), St. Louis Post-Dispatch, Seattle Times and China Daily USA. He also served as bureau chief for two Internet news startups: MedCityNews.com and Xconomy.com.