Trump trade policies under fire at Aspen Security Forum |

Trump trade policies under fire at Aspen Security Forum

While China needed to be effectively confronted over its trade policies toward the U.S., the way the Trump administration did it was antiquated, counter-productive and overly negative, according to three experts on doing business in China who spoke Thursday at the Aspen Security Forum.

Further, President Donald Trump’s recent threat to impose tariffs on Mexico over immigration worries U.S. trading partners and undermines future trade agreements America is trying to negotiate, according to a panel of trade experts who also spoke Thursday at the Forum.

“Look what he did to Mexico after signing a trade agreement (with them),” said Rufus Yerxa, president of the National Foreign Trade Council. “That’s a good example of his mindset.”

Trump backed down on the threat to impose the Mexican tariffs.

But William Reinsch, a senior business adviser at the Center for Strategic and International Studies, said Trump’s Mexican tariff threat sent a clear message.

“That message was mostly for other countries: ‘If we make a deal with this gang, is it going to stick?’” Reinsch said. “I think it spooked the Chinese. It’s clearly bothering the Europeans and the Japanese. It’s worrying the Koreans, who have a completed deal.”

The Mexican tariff threat makes it less likely that the U.S. under Trump will be able to negotiate other multi-lateral or bilateral trade agreements, Yerxa said.

Susan Schwab, a former U.S. trade representative under President George W. Bush, said American trade negotiators have to be credible to get results.

Current negotiations with Japan over a trade agreement are off to a slow start and “not likely to succeed,” Schwab said. Also, an agreement with the United Kingdom cannot even begin to be negotiated until the details of Brexit are worked out, she said.

Meanwhile, the European Union is negotiating free-trade agreements “and we are left behind,” Schwab said.

As for the trade war with the Chinese, Schwab gave Trump credit for getting China’s attention, which she said the Obama administration was never able to do.

However, the Trump administration’s trade paradigm harkens back to the way it worked before the proliferation of rules-based trade agreements and the creation of the World Trade Organization in 1995, Reinsch said. At the time, there were fewer constraints on U.S. trade actions than now, he said.

Yerxa said the administration’s trade stance, in which it acts like China, is a mistake.

“We should strengthen, not abandon, the rules-based system,” he said.

A more effective way to negotiate with China is through a coalition of countries, which could more easily make them agree to fairer trade rules, Yerxa said.

The idea of pressuring China using a coalition of countries also came up in the discussion about whether business can succeed China, which followed the forum’s talk on trade and tariffs.

Tom Pritzker, executive chairman of Hyatt Hotels Corp., said the larger scale of support provided by alliances is the best way to respond to China’s business and trade policies. The country has a very different history, culture and set of values than Western countries, who created the world order, he said.

“(They say) ‘Why should we change to accommodate you? We’re not the ones who need to change,’” Pritzker said.

Those companies who do business in China are now divided over whether the Trump administration’s trade policies are counter-productive or terrific, said Stephen Orlins, president of the National Committee on U.S.-China Relations. Some are a victim of “promise fatigue” by the Chinese, who long promised reforms but have not delivered, he said.

One-third of American companies with production in China have shifted it elsewhere in the last year, said Anja Manuel, principal at the Silicon Valley-based consulting firm of RiceHadleyGates.

Others like Hyatt, which is set to hire 50,000 Chinese employees, continue to operate until the Chinese no longer feel they’re getting the better deal, Pritzker said.

“We are aligned with Chinese interests at the moment,” he said. “If we fall out of alignment, we may be in trouble.”

Any trade deal between the U.S. and China probably isn’t coming very soon, Reinsch said.

That’s because the structural reforms Americans want in the Chinese economy would reduce state control and Chinese President Xi Jinping “is never going to do that,” he said.

“Trump’s choice is to accept less or continue the war,” Reinsch said.

But don’t expect Trump to accept anything until far closer to the 2020 election, he said, when he’ll trumpet whatever it is as the best deal ever, sell it on the campaign trail and not have to deal with the consequences of whatever the agreement’s results might be, he said. If he takes a deal earlier, he risks letting Democrats hammer him on possible negative results, Reinsch said.


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