Trump Trade Policies Uncertain, According to Panelists

SPENCER COOK/THE HOYA President Donald Trump's trade policies remain uncertain, but may be heavily protectionist, according to panelists at an event Wednesday.

SPENCER COOK/THE HOYA President Donald Trump’s trade policies remain uncertain, but may be heavily protectionist, according to panelists at an event Wednesday.

President Donald Trump is challenging standing trade rules and agreements, but the extent to which he will continue to do so is uncertain, according to the speakers at the International Trade Under Trump event in Healy Hall on April 25.

The event, hosted by the Alexander Hamilton Society, featured panelists Michael Smart, former director for international trade on the National Security Council, and Rodney Ludema, Georgetown professor of economics and former chief economist of the U.S. Department of State. Georgetown professor of government Robert Lieber moderated the event.

Lieber introduced the panel and said Trump’s policies have been characterized by a populist spirit.

“The issues and positions that [Trump] took during the election campaign were highly controversial,” Lieber said. “The positions he and his administration have adopted since that time often represent considerable changes from what transpired during the campaign, like the impulses of nationalism and populism which were expressed by President Trump during the campaign and were expressed by many of his supporters and voters.”

Throughout his presidential campaign, Trump criticized existing trade deals and proposed expansions to the free trade regime former President Barack Obama pursued during his term. POLITICO first reported Trump was considering signing an executive order to initiate the United States’ withdrawal from the North American Free Trade Agreement, a multilateral deal between Canada, Mexico and the U.S. that removes tariffs on trade between the three nations.

The White House announced Wednesday night it would not withdraw from NAFTA, but would move “swiftly” to renegotiate the agreement, after calls from Sen. Ben Sasse (R-Neb.) and other Republican senators not to withdraw.

Ludema said the uncertainty surrounding Trump’s actions will have a negative impact on international trade.

“I think it’s part of the problem from an economic standpoint that we really don’t know the answers to these questions, and that’s actually by itself extremely bad for international trade. International trade relies on investments. Uncertainty itself kills that,” Ludema said. “We’re already in this protectionist climate simply because of the guessing game between Donald Trump’s rhetoric on the one hand, and what he’ll actually do.”

Lieber noted that Sen. Bernie Sanders (I-Vt.), a 2016 Democratic presidential candidate, opposed the Trans-Pacific Partnership, a major U.S.-led trade agreement in Asia. Former Secretary of State and Democratic presidential nominee Hillary Clinton did so as well, though after calling the agreement the “gold standard” in 2012.

The TPP was a multilateral trade agreement between 11 Asian, North and South American countries including the United States that reduced tariffs and other barriers to free trade between the 12 nations, and included a mechanism for countries to settle commercial disputes.

Lieber said this opposition from both sides of the political spectrum demonstrated the challenges free trade proponents faced during the presidential campaign.

“The challenges to an open political trading regime become very evident well before the election,” Lieber said.

Smart noted Trump’s criticism of existing trade agreements, namely NAFTA, which Trump had criticized and signaled support for a potential withdrawal before announcing he would not withdraw after the event, as he approaches his 100th day in office.

“What do we see as we approach the 100-day mark of the administration? Well, I think what you see is a deceleration of his ambition to get out there and renegotiate,” Smart said.

The Trump administration is receiving significant pushback from trading partners and the private sector, according to Smart. Smart added the administration may face difficulties negotiating with other parties to the agreements.

“I think one of the biggest flaws in the thinking of this administration is that the U.S. has all the leverage — when we say we want to renegotiate and essentially set the terms. And while the U.S. does have a lot of leverage, the other side has some too. I think they’re starting to discover that,” Smart said.

Smart also said the administration has signaled intent to use trade remedies, including the pursuit of antidumping and safeguard policies, even more so than previous administrations. Throughout his campaign, Trump signaled support for stricter World Trade Organization regulation of Chinese economic policy.

“The United States has never been bashful about using these trade remedies; to listen to the campaign rhetoric, you’d think that they were.” Smart said. “But the administration came in and they were even more determined to be even more aggressive — and China is really their target.”

Ludema said he believes the administration’s protectionist campaign rhetoric will be limited by its powers under current World Trade Organization rules.

“I expect reality to come crashing in and I expect rationality to prevail. As a result, what I think is going to happen is that in order to make good on campaign promises, the Trump administration is going to have to take some protectionist actions,” Ludema said, “[But] they’ll do those things that are already legal to do under existing rules.”

Smart said he is less hopeful about the administration’s harm to the present system and order.

“The more aggressive use of trade remedies is something this administration is absolutely going to do,” Smart said. “About half of all WTO decisions have been about trade remedies, and so the way we administer these rules has come under heavy international scrutiny.”

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