As China Talks Begin, Trump’s Trade Negotiator Tries to Keep President From Wavering

WASHINGTON — In the middle of his crowded dinner in Buenos Aires with President Xi Jinping of China, President Trump leaned across the table, pointed to Robert Lighthizer, the United States trade representative whose skepticism of China runs deep, and declared, “That’s my negotiator!

He then turned to Peter Navarro, his even more hawkish trade adviser, adding, “And that’s my tough guy!” according to aides with knowledge of the exchange.

Now, with talks between China and the United States set to begin this week in Beijing, Mr. Lighthizer, aided by Mr. Navarro, faces the assignment of a lifetime: redefining the trade relationship between the world’s two largest economies by Mr. Trump’s March 2 deadline to reach an agreement.

And he must do it in a way that tilts the balance of power toward the United States. His approach will have significant ramifications for American companies, workers and consumers whose fortunes, whether Mr. Trump likes it or not, are increasingly tied to China.

First, however, Mr. Lighthizer will need to keep a mercurial president from wavering in the face of queasy financial markets, which have suffered their steepest annual decline since 2008. Despite his declaration that trade wars are “easy to win” and his recent boast that he is a “Tariff Man,” Mr. Trump is increasingly eager to reach a deal that will help calm the markets, which he views as a political electrocardiogram of his presidency.

Mr. Trump has repeatedly told his advisers that Mr. Xi is someone with whom he can cut a big deal, according to people who have spoken with the president. On Saturday, Mr. Trump called Mr. Xi to discuss the status of talks, tweeting afterward that good progress was being made. “Deal is moving along very well,” Mr. Trump said.

The administration has tried to force China to change its ways with stiff tariffs on $250 billion worth of Chinese products, restrictions on Chinese investment in the United States and threats of additional levies on another $267 billion worth of goods. China has responded with its own tit-for-tat tariffs on American goods. But over a steak dinner during the Group of 20 summit meeting in Argentina, Mr. Xi and Mr. Trump agreed to a 90-day truce and to work toward an agreement that Mr. Trump said could lead to “one of the largest deals ever made.”

Mr. Lighthizer — whose top deputy will meet with Chinese officials this week ahead of more high-level talks in February — has played down any differences with Mr. Trump and views his role as ultimately executing the directive of his boss. But the trade representative, who declined to be interviewed, has told friends and associates that he is intent on preventing the president from being talked into accepting “empty promises” like temporary increases in soybean or beef purchases.

Mr. Lighthizer, 71, is pushing for substantive changes, such as forcing China to end its practice of requiring American companies to hand over valuable technology as a condition of doing business there. But after 40 years of dealing with China and watching it dangle promises that do not materialize, Mr. Lighthizer remains deeply skeptical of Beijing and has warned Mr. Trump that the United States may need to exert more pressure through additional tariffs in order to win true concessions.

When Mr. Lighthizer senses that anyone — even Mr. Trump — might be going a little soft on China, he opens a paper-clipped manila folder he totes around and brandishes a single-page, easy-reading chart that lists decades of failed trade negotiations with Beijing, according to administration officials.

Bob’s attitude toward China is very simple. He wants them to surrender,” said William A. Reinsch, a former federal trade official who met him three decades ago when Mr. Lighthizer was a young aide for former Senator Bob Dole of Kansas. “His negotiating strategy is simple too. He basically gives them a list of things he wants them to do and says, ‘Fix it now.’

Mr. Trump’s selection of Mr. Lighthizer last month to lead the talks initially spooked markets, which viewed the China skeptic’s appointment as an ominous sign. It also annoyed Chinese officials, who had been talking with the Treasury secretary, Steven Mnuchin, a more moderate voice on trade and the primary point of contact for Liu He, China’s top trade negotiator. Mr. Mnuchin has urged the president to avoid a protracted trade war, even if that entails reaching an interim agreement that leaves some issues unresolved.

Mr. Mnuchin, who attended the G-20 dinner, helped Mr. Trump craft an upbeat assessment declaring the Buenos Aires meeting “highly successful” in the presidential limousine back to the airport, according to a senior administration official.

The disparate views among Mr. Trump’s top trade advisers have prompted sparring — both publicly and behind the scenes.

During an Oval Office meeting with the trade team the fall of 2017, Mr. Lighthizer accused Mr. Mnuchin and Gary D. Cohn, the former National Economic Council director, of bad-mouthing him to free-trade Republican senators.

The argument grew so heated that the White House chief of staff, John F. Kelly, quickly pulled the combatants into the nearby Roosevelt Room and away from the president, where the argument raged on for a few more minutes, according to two witnesses.

Emily Davis, a spokeswoman for the United States trade representative, disputed the account.

Mr. Lighthizer has since worked to increase his own face time with Mr. Trump. He has joked to colleagues that he has more influence with Mr. Trump during winter months because he is able to hitch a ride on Air Force One during the president’s flights down to Mar-a-Lago, which is several miles from Mr. Lighthizer’s own $2.3 million waterfront condo in Palm Beach, Fla.

He used that access to argue to Mr. Trump that the United States has never had more leverage to extract structural reforms on intellectual property, forced transfer of technology from American companies and cybercrime. But while Mr. Trump has jumped at the chance to claim victory in changing China’s ways, experts say that what Mr. Lighthizer is demanding would require significant shifts in how Beijing’s central government and its manufacturing sector coordinate their activities, and that might simply not be possible in the short term.

“Good luck with that,” Mr. Scissors said.

Those who know Mr. Lighthizer say he will try to force concessions through a combination of pressure tactics, like tariffs, and public condemnation. Mr. Lighthizer — who described his own negotiating style as “knowing where the leverage is” during a 1984 interview — typically presents few specific demands during initial talks while publicly bashing efforts by the other side.

He used that approach during recent talks with Canada and Mexico to revise the North American Free Trade Agreement, criticizing foreign counterparts as intransigent and characterizing complaints by American businesses as pure greed.

Mr. Lighthizer’s unsparing view of China comes, in part, from his childhood in Ashtabula, Ohio, an industrial and shipping town on the Great Lakes hit by the offshoring of steel and chemical production. For much of his career, Mr. Lighthizer was a lonely protectionist voice in a Republican Party dominated by free traders, alternating between jobs in government and a lucrative private law career representing large American corporations like United States Steel in trade cases against China.

Mr. Lighthizer found his way into Mr. Trump’s orbit through his work in the steel industry, where he gained prominence by filing lawsuits accusing Japan and China of dumping metals into the United States, in violation of trade laws. In 2011, Mr. Lighthizer caught Mr. Trump’s eye with an opinion piece in The Washington Times, in which he defended Mr. Trump’s approach to China as consistent with conservative ideology and compared the future president to Republican icons like Ronald Reagan.

Taciturn in public and self-deprecating in private, Mr. Lighthizer sees himself as a serious player on the world stage: Two recent guests to Mr. Lighthizer’s Georgetown townhouse were greeted by the stern visage of their host staring down at them from an oil portrait on the wall.

The trade adviser is guarded around Mr. Trump, often waiting until the end of meetings to make his points and quietly nudging the president away from actions he views as counterproductive, current and former officials said. That was the case in mid-2017 when he cautioned the president against withdrawing unilaterally from the World Trade Organization, adding for emphasis, “And I hate the W.T.O. as much as anybody.”

He does not always get his way. In the wake of a new trade agreement with Mexico and Canada this fall, Mr. Lighthizer urged Mr. Trump to consider easing steel and aluminum tariffs on those countries and replacing them with less burdensome quotas. Mr. Trump rejected his plan, according to negotiators from all three countries.

A poker-faced Mr. Lighthizer broke the news to his Mexican and Canadian counterparts by declaring the proposal was inoperative, one of the officials said.

The president also ignored Mr. Lighthizer’s advice in early December when he announced that he intended to begin the six-month process of withdrawing the United States from Nafta in order to pressure House Democrats into passing the new United States-Mexico-Canada Agreement.

That threat undermined months of quiet negotiations between Mr. Lighthizer, labor groups and Democrats like Senator Sherrod Brown of Ohio and Representative Nancy Pelosi of California to try to win their support for the new trade deal. Mr. Trump has yet to follow through on his threat, and Mr. Lighthizer continues trying to work with Democrats to get the new trade deal approved.

Bob is trying to provide stability and focus in a completely chaotic environment,” Mr. Brown said. “I can’t speak for Bob, but I am certain he is frustrated. How could you not be frustrated as the U.S. trade representative for a president who knows what his gut thinks but hasn’t put much of his brains into trade?

 

Jim Mattis Compared Trump to ‘Fifth or Sixth Grader,’ Bob Woodward Says in Book

President Trump so alarmed his defense secretary, Jim Mattis, during a discussion last January of the nuclear standoff with North Korea that an exasperated Mr. Mattis told colleagues “the president acted like — and had the understanding of — a ‘fifth or sixth grader.’”

At another moment, Mr. Trump’s aides became so worried about his judgment that Gary D. Cohn, then the chief economic adviser, took a letter from the president’s Oval Office desk authorizing the withdrawal of the United States from a trade agreement with South Korea. Mr. Trump, who had planned to sign the letter, never realized it was missing.

.. book by Bob Woodward that depicts the Trump White House as a byzantine, treacherous, often out-of-control operation — “crazytown,” in the words of the chief of staff, John F. Kelly — hostage to the whims of an impulsive, ill-informed and undisciplined president.

.. The White House, in a statement, dismissed “Fear” as “nothing more than fabricated stories, many by former disgruntled employees, told to make the president look bad.”

.. Mr. Woodward portrays Mr. Mattis as frequently derisive of the commander in chief, rattled by his judgment, and willing to slow-walk orders from him that he viewed as reckless.

.. Mr. Trump questioned Mr. Mattis about why the United States keeps a military presence on the Korean Peninsula. “We’re doing this in order to prevent World War III,” Mr. Mattis responded, according to Mr. Woodward.

.. In April 2017, after President Bashar al-Assad of Syria launched a chemical attack on his own people, Mr. Trump called Mr. Mattis and told him that he wanted the United States to assassinate Mr. Assad. “Let’s go in,” the president said, adding a string of expletives.

The defense secretary hung up and told one of his aides: “We’re not going to do any of that. We’re going to be much more measured.” At his direction, the Pentagon prepared options for an airstrike on Syrian military positions, which Mr. Trump later ordered.

.. another layer to a recurring theme in the Trump White House: frustrated aides who sometimes resort to extraordinary measures to thwart the president’s decisions — a phenomenon the author describes as “an administrative coup d’état.” In addition to Mr. Mattis and Mr. Cohn, he recounts the tribulations of Mr. Kelly and his predecessor, Reince Priebus, whose tensions with Mr. Trump have been reported elsewhere.

.. Mr. Cohn, Mr. Woodward said, told a colleague he had removed the letter about the Korea free trade agreement to protect national security. Later, when the president ordered a similar letter authorizing the departure of the United States from the North American Free Trade Agreement, Mr. Cohn and other aides plotted how to prevent him from going ahead with a move they feared would be deeply destabilizing.

.. Last January, Mr. Woodward writes, Mr. Dowd staged a practice session in the White House residence to dramatize the pressures Mr. Trump would face in a session with Mr. Mueller. The president stumbled repeatedly, contradicting himself and lying, before he exploded in anger.

.. Mr. Woodward told Mr. Trump he interviewed many White House officials outside their offices, and gathered extensive documentation. “It’s a tough look at the world and the administration and you,” he told Mr. Trump.

“Right,” the president replied. “Well, I assume that means it’s going to be a negative book.”

Stephen K. Bannon has won

This is the victory not only of a Trump personality cult, as it has been described, but also of an ideology, one closer to Putinism than Reaganism.

.. Back then, you may recall, some of the “crazies” — such as national security adviser Michael Flynn — had left the White House, and supposed pragmatists had taken charge: H.R. McMaster for national security, Gary Cohn for economics, Jared and Ivanka for — well, for general reasonableness.

.. There was talk of working with Democrats on infrastructure. Trump wanted to help the “dreamers,” those blameless young immigrants brought to this country as children. It seemed that existing international agreements — NATO, the North American Free Trade Agreement, the Paris climate accord — might be preserved, with some face-saving adjustments. Trump was still the politician who had spoken tolerantly on LGBT issues.

..  The White House defines itself and prepares to motivate its voters by the “enemies” it constantly creates, refines and rediscovers, including African American athletes, the press (“Our Country’s biggest enemy,” in a recent Trump tweet), Canadian Prime Minister Justin Trudeau (“very dishonest & weak”), and special counsel Robert S. Mueller III (directing a “Witch Hunt, led by 13 very Angry and Conflicted Democrats”). Also: Sen. Jeff Flake (R-Ariz.), German Chancellor Angela Merkel, Democratic leaders in the Senate and House, former FBI director James B. Comey, his own attorney general, his deputy attorney general . . . The list will never end.

.. But Bannonism is not just a snarling attitude. It encompasses a contempt for democracy and a respect for authoritarianism. When Trump refused to sign a statement of solidarity with the world’s other six leading industrial democracies and then proceeded to slather praise on North Korea’s dictator (“a tough guy . . . a very smart guy”), this was not just a sign of personal pique or favoritism: The U.S. president raised questions in the minds of other leaders about whether the concept of the West itself can survive his presidency.

.. It encompasses an “America First,” for-me-to-win-you-have-to-lose philosophy

.. It encompasses a contempt for immigrants, for outsiders of any kind. Certainly it is possible to support lower levels of immigration without being a racist. But to countenance the deliberate policy of tearing away small children from their parents that we are seeing today on the U.S.- ­Mexico border is consistent only with a worldview that deems Mexicans and Salvadorans somehow less human, less worthy, than white Americans.

..it’s no coincidence that Trump, who boasted about being the first Republican to say LGBTQ in his convention acceptance speech in 2016, has, as The Post’s James Hohmann noted last week, tried to ban transgender people from the military, removed protections for transgender inmates, employees and students, failed to acknowledge Pride Month and disbanded the Presidential Advisory Council on HIV/AIDS. As in Vladimir Putin’s Russia, this revival of bigotry dovetails with an effort to woo the conservative Christian establishment.

.. Finally, Bannonism encompasses contempt for the government itself.

.. his constant disparagement of the Justice Department and the FBI; his at times insultingly unsuitable appointments (such as his personal physician to head the mammoth Department of Veterans Affairs); and his generally cavalier attitude toward staffing. Even today, 17 months into his first term, fewer than half of the 667 key positions tracked by The Post in collaboration with the Partnership for Public Service are filled, and for almost 200 there are no nominees.

.. How has Bannonism prevailed without Bannon? In part, with the help of true believers who remain in the White House, including Stephen Miller (on immigration) and Peter Navarro (on trade).

.. But another answer came from Trump himself, who said after Bannon’s firing: “Steve Bannon has nothing to do with me or my presidency. . . . Steve was a staffer.”

Even discounting for Trump’s normal petulance and self-aggrandizement, there may have been an element of truth in what he said. The anti-democratic, protectionist, anti-immigrant, pro-authoritarian administration that has now taken shape, in other words, is not only Bannonism. It is raw and unvarnished Trumpism, too.

Thinking About a Trade War (Very Wonkish)

With Gary Cohn gone, it’s not clear that big business has any real pipeline into the White House (OK, polluters have an open line to Scott Pruitt, and predatory lenders a line to Mick Mulvaney, but these aren’t the groups who will stand up against trade war.)

.. Congressional Republicans, terrified of the Trump base, have proved unwilling to take a stand on anything, even if big money is at stake.

.. trade decisions are being made at Trump’s whim, without input from anyone who knows anything about trade economics (Peter Navarro thinks he understands the economics, which is even worse.)

.. Trump’s version of diplomacy – not just trade actions, but the systematic praise of brutal dictators and disdain for democratic leaders – has created a very angry world out there. Nobody out there wants to give Trump even the appearance of a win, and elected leaders would be punished by their voters if they did.
.. I think, three main questions:

1. How high might tariffs go?

2. How much would this reduce world trade?

3. How costly would the trade war be?

.. an all-out trade war could mean tariffs in the 30-60 percent range; that this would lead to a very large reduction in trade, maybe 70 percent; but that the overall cost to the world economy would be smaller than I think many people imagine, maybe a 2-3% reduction in world GDP... some people would actually gain, but a lot of people, very much including large groups and many communities in the U.S., would take big hits, especially in the short-to-medium run.

.. world’s economies, taking their lead from the U.S., abandon the rules and agreements that currently constrain their tariffs and start setting tariffs unilaterally in their perceived self-interest.

.. The problem is that if everyone does this, you get the costs of reduced trade without the benefit of improved terms of trade, because other countries are doing unto you the same thing you’re trying to do unto them.
.. “optimal tariff warfare”, which is actually more like an arms race than a shooting war, in the sense that there’s (usually) no victor and no resolution, just a lot of wasted resources.
.. Then you have to find an equilibrium (a Nash equilibrium, for readers of “A Beautiful Mind”) in which each country is charging its optimal tariff given what everyone else is doing.
.. If foreigners can easily substitute away from your goods, the optimal tariff is fairly low; if they can’t, it’s high.
.. if that’s right, we’re talking about a really big rollback of world trade.
..  a 70 percent reduction would bring us roughly back to 1950s levels. If Trump is really taking us into a trade war, the global economy is going to get a lot less global.
.. they do say that trade wars are bad, don’t say that they’re catastrophic.
.. the U.S. currently spends 15 percent of GDP on imports.
.. at the bottom of the Great Recession, CBO estimates that we were operating 6 percent below potential GDP. Of course that loss was temporary, while a trade war might be forever.
.. The U.S. currently exports about 12 percent of GDP.
.. if we have the kind of trade war I’ve been envisaging, something like 70 percent of that part of the economy – say, 9 or 10 million workers – will have to start doing something else.
.. the rapid growth of Chinese exports didn’t cost the U.S. jobs on net, it changed the composition and location of employment, producing a lot of losers along the way. And the “Trump shock” that would come from a trade war would be an order of magnitude bigger.
.. the effects don’t seem trivial to soybean farmers already facing sharp price cuts and steel users already facing much higher costs.