Tue | Feb 19, 2019

US trade agenda hits stumbling blocks

Published:Wednesday | May 30, 2018 | 12:00 AM
In this February 29, 2016 file photo, a CMA CGM Benjamin Franklin container ship is towed to Seattle's Terminal 18. The US trade gap continues to widen as Trump's trade agenda hits roadblocks. (AP)

American president Donald Trump's hard-line views on trade, a staple of his message long before he entered politics, are beginning to collide with the cold realities of global geopolitics.

Trade talks on China and the North American Free Trade Agreement have hit stumbling blocks, posing a challenge for a president who vowed to make trade deals more equitable for the United States during his 2016 campaign and who famously tweeted that trade wars are "easy to win."

Trump's trade agenda - at least lately - has not been so easy. The administration announced plans Tuesday to slap US$50 billion worth of tariffs on Chinese technology while taking steps to impose new investment restrictions and export controls, aimed at pushing China to remove trade barriers that make it difficult for United States companies to do business in China.

The new action came after the administration said earlier this month that it had suspended plans to impose US$150 billion in tariffs for now and the president tweeted last week that a "different structure" would be needed in the trade talks involving the world's two largest economies.

The president has bemoaned the massive US trade deficit with China - US$337 billion last year - as evidence that Beijing has been complicit in abusive trading practices and outsmarted his predecessors.

Pointing to a pause in the trade dispute, the adminis-tration had pointed to China's plans to "significantly increase" its purchases of US goods and services and make "meaningful increases" in US exports of agriculture and energy products. Financial markets, wary of a calamitous trade war, were relieved.

But Beijing did not agree to any specific dollar amounts, despite the Trump administration's push to lower the US trade deficit by at least US$200 billion. And doubts remain about whether China will address allegations the Chinese engage in cybertheft of trade secrets, force US companies to transfer some of their technology in exchange for market access or back away from its China 2025 plan to dominate emerging technologies.

 

Reached a deal

 

Separately, on Friday, the US reached a deal on ZTE Corp that will allow the Chinese telecommunications giant to remain in business. Under the deal, ZTE will oust its management team, hire American compliance offers and pay a fine - on top of the US$1 billion it's already paid for selling equipment to North Korea and Iran in violation of US sanctions. In return, the US Commerce Department will lift a seven-year ban on ZTE buying components from US companies. The ban, imposed this month, threatened to put ZTE out of business.

Trump said earlier that a resolution would help US firms that supply ZTE with components, but members of Congress, including several Republi-cans, warned that the US is being too lenient on a company that has violated US sanctions.

"ZTE presents a national security threat to the United States - and nothing in this reported deal addresses that fundamental fact," said Senator Chris Van Hollen, D-Maryland. "If President Trump won't put our security before Chinese jobs, Congress will act on a bipartisan basis to stop him."

Trump's team, meanwhile, has hit an impasse with Canada and Mexico on negotiations over NAFTA. The president has sought to overhaul NAFTA as a way of returning automobile production to the US and reduce America's trade deficit with Mexico.

But the talks are running into the complications of Mexican elections in July and the US midterm elections in November along with a dispute over rules for car production.

Seeking leverage, Trump's adminis-tration launched an investigation into whether tariffs might be necessary on car imports, based on national security concerns. The potential penalties could affect Mexico, Canada, Japan and the European Union.

The administration used a similar Commerce Department probe to impose tariffs in March on imported steel and aluminium.

But auto manufacturers said they didn't push for the auto investigation, and members of Congress questioned the validity of the probe.

"The Honda Accord is not a threat to our national security," said Representative Jeb Hensarling, R-Texas, hours after joining Trump for a bill signing at the White House. But he added that "taxing it with trade tariffs is a threat to the economic security of millions of hard-working American families."

AP