Trump administration takes first steps in defining trade policy
On March 31, President Trump signed two executive orders on US trade policy. The orders mark the president’s first actions on one of the centerpiece policy points of his platform: international trade reform. The president made resolving US trade deficits with China, Japan, and Mexico a key issue during his campaign, and promised to strike more beneficial trade agreements for American workers and manufacturing companies. In his brief address to members of the media at the Oval Office the president said, “Thousands of factories have been stolen from our country, but these voiceless Americans now have a voice in the White House. Under my administration, the theft of American prosperity will end. We’re going to defend our industry and create a level playing field for the American worker, finally.”
The pair of orders will require a comprehensive report on the causes of the trade imbalance within 90 days. The report will focus on those 16 countries with which the United States has its greatest trade deficits in the last year including: China, Japan, Germany, Mexico, Ireland, Korea, and France. The two orders are also aimed at forming a strategy for confronting importers who have been found guilty of abusive trade practices as well as requiring a bond to be posted before some importer’s goods are permitted through US ports. The president’s cabinet and team have spoken highly of the executive orders. Secretary of Commerce Wilbur Ross said “If anyone had doubts about the president’s resolve to fix the trade problems, these two executive orders should end that speculation now and for all time…This marks the beginning of a totally new chapter in the American trade relationship with our partners overseas.” Professor Peter Navarro, Director of the National Trade Council, said, “Today this is the beginning of the fulfillment of those promises in a grand way.”
The dual executive orders come at a pivotal time for the administration. With the republican healthcare initiative hitting a temporary roadblock, the administration is seeking to mitigate the political fallout from its setback on the legislative front and refocus on the president’s executive agenda. The timing is also important as President Trump has his first face to face meeting with Chinese President Xi Jinping in a summit at Trump’s Mar-a-Lago estate on April 6 and 7. Trump has met with world leaders like U.K prime minister Theresa May and Prime minister of Japan Shinzo Abe, but the meeting next week with Chinese Xi Jinping may be the most pivotal one thus far given the president’s long standing opposition to China’s trade policy. The president tweeted out on Friday that “The meeting next week with China will be a very difficult one in that we can no longer have massive trade deficits… and job losses. American companies must be prepared to look at other alternatives.” In the campaign, Trump had singled out China for its currency manipulation and charged the country of ripping the United States off.
However, the administration has tried to downplay some of links being drawn between the orders and China specifically. In his daily press briefing, Press Secretary Sean Spicer discussed the trade orders and China in particular, “On the trade front, we’ve got serious concerns with what they’re doing, our trade practices with them,” Spicer said of China. He also noted that Trump wants a “very good and healthy and respectful relationship” with the country.
Some economists and trade experts have cautioned against looking exclusively at trade deficits as barometer for the health of the American economy. Thomas J. Donahue, CEO of the Unites States Chamber of Commerce said, “It is worth remembering that some of our best years of economic growth have produced our largest trade deficits, while the Great Recession was accompanied by a sharp reduction in the trade deficit.”
Friday’s executive orders mark the strongest steps taken by the Trump administration to tackle trade deficits and reclaim billions of dollars in countervailing duties and antidumping fines that had never been collected. If the text of the executive orders are released and the meeting with the Chinese president revelatory, the broader trade strategy of the Trump administration will become clearer.
photo credit: kennethkonica via photopin (license)
