Back from the Road: The Politics of Trade
The Trade Guys close out their September recording tour at home with a live audience of Customs and International Trade Bar Association lawyers and the public. The guys began with a conversation on the politics of trade ahead of the midterm elections. They also discussed China, NAFTA…and memes.
What We’re Reading
“Canada’s Trudeau under growing pressure to get NAFTA deal done”
“Business and political leaders are increasing the pressure on Canadian Prime Minister Justin Trudeau to agree on a deal to renew NAFTA and drop his insistence that no deal is better than a bad deal.”
“Signs are growing that hitherto solid domestic support for Ottawa’s stance is fraying amid fears of the potential economic damage. The United States takes 75 percent of Canada’s goods exports and President Donald Trump is threatening to impose tariffs on autos.”
“’The problem with the bold statement that ‘No deal is better than a bad deal’ is that a bad deal is very much in the eye of the beholder,’” said John Manley, a former Liberal finance minister who heads the Business Council of Canada, which groups many chief executives.
Why it matters: As U.S. pressure on Canada to make a deal or get left behind builds, Canadian Prime Minister Justin Trudeau remains in bind: he must choose between taking a political optics hit by succumbing to U.S. demands to salvage a NAFTA deal or standing up to President Trump – who is immensely unpopular in Canada – and risk the economic downsides of being left the new NAFTA.
Key question: Will Trudeau opt to sacrifice Canada’s inclusion in the new NAFTA to score a political win, or will he make concessions to the U.S. to salvage a NAFTA deal.
“Trump Has Put the U.S. and China on the Cusp of a New Cold War”
“President Trump is confident that the United States is winning its trade war with China. But on both sides of the Pacific, a bleaker recognition is taking hold: The world’s two largest economies are in the opening stages of a new economic Cold War, one that could persist well after Mr. Trump is out of office.”
“’This thing will last long,’ Jack Ma, the billionaire chairman of Alibaba Group, warned a meeting of investors on Tuesday in Hangzhou, China. ‘If you want a short-term solution, there is no solution.’
“Mr. Trump intensified his trade fight this week, imposing tariffs on $200 billion worth of Chinese goods and threatening to tax nearly all imports from China if it dared to retaliate. His position has bewildered, frustrated and provoked Beijing, which has responded with its own levies on American goods.”
“The diplomatic stalemate has many in the business and policy communities considering the possibility that the United States may be in a protracted and economically damaging trade fight for years to come and wondering what, if anything, America will gain.”
Why it matters: The United States and China have entered a new phase of the trade war, and it’s unclear when the two sides will talk again. When the $200 billion tariff order comes into force on Sept. 24, nearly half of all U.S. imports from China will be subject to tariffs. The president continues to threaten tariffs on all Chinese imports if China does not meet U.S. demands. Meanwhile, China is quickly running out of U.S. goods to retaliate against due to the trade imbalance.
Key questions: Is a negotiated solution possible at this point or have the stakes simply gotten too high for either government to back down? Is China running out of ammo in the trade fight, or will it resort to other tactics like restricting U.S. investment in China, frustrating U.S. companies there, weakening its currency, or dumping Treasury bonds?
“Republicans Opposing Trump on Trade Face Election Quandary”
“As President Trump again ratchets up trade tensions with China and Canada, he has the strong backing of Republican voters. But he risks putting his party’s congressional candidates — many of whom are more supportive of free trade — in a bind.”
“Top Republicans in Congress love Mr. Trump’s tax cuts, but they do not love the tariffs that have become the centerpiece of his trade policy. This combination is a classic conservative position that favors low taxes, whether on income or on imports.”
“Few Americans outside Washington share that view.”
Why it matters: President Trump’s trade policies have put Republicans running in the midterm election in a bind. Polling done by SurveyMonkey for the New York Times indicates that Republican voters favor President Trump’s tariffs and tax cuts, despite Congressional Republicans supporting only the latter and opposing the former. Embracing the tariffs could win support from the Republican base but risks alienating independents, according to the data. Continuing to oppose the tariffs could cost Republican candidates support from the President and his crucial base.
Key questions: How should Republicans address this bind? Is this really a huge issue for them, considering that other data indicates that voters don’t generally case their ballot based on a given candidate’s trade policy?