Trade deficit. “We need and we will get lower trade deficits, and we will stop exporting jobs and start exporting more products instead,” Commerce Secretary Wilbur Ross said last March after the President announced his steel tariffs. We disagree with the President’s preoccupation with trade deficits, which are affected more by capital flows and currency values than trade policy.
But it’s worth pointing out that the trade deficit in steel increased last year by $1 billion as exports (measured in dollars) fell 7% and imports rose 1%. Imports ton for ton fell more than exports did. But the average price of steel per ton increased more for imports than exports, perhaps due to shifts in currency values and product deliveries—e.g., businesses importing more expensive specialized steel grades.
Retaliatory tariffs by Canada and Mexico contributed to a $650 million drop in American steel exports. At the same time imports increased from Mexico and Canada, which are deeply integrated into U.S. supply chains. In many cases manufacturers paid the tariff and passed on the cost to customers.
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?”
“So the money could boost revenue, but it’s not Mexico paying,” Mr. Ortiz-Mena said. “It will be U.S. companies or U.S. workers at the end of the day paying for the wall.” After exploring a few other long-shot scenarios, he said: “I can’t see it. Sorry.”
Some of Mr. Trump’s supporters also can’t see it, and have taken matters into their own hands. A crowdfunding effort for a U.S.-Mexico border wall has raised nearly than $17 million. More than 279,400 people have donated to the GoFundMe page, titled “We the People Will Fund the Wall,” which aims to raise $1 billion.
Other economists say the price tag for a wall is a moving target—partly because of Mr. Trump’s steel and aluminum tariffs. In recent days, the president has modified his description of what his “big, beautiful, impenetrable” wall would look like, suggesting that steel slats would do the trick.
“We don’t use the word ‘wall’ necessarily, but it has to be something special to do the job—steel slats,” Mr. Trump said last week.
Prices for steel and aluminum, both imported and domestic, are on the rise due to the administration’s global trade dispute. Mr. Trump placed tariffs on all countries from which the U.S. imports the metals, save a few exceptions.
The move “increases both the price of steel you import from countries like Mexico and Canada, but it also leads to increases to the price of steel you make in the United States,” said Chad Bown, a senior fellow at the Peterson Institute for International Economics in Washington. “American steel companies don’t face as much competition from imports so they are able to jack up their prices and charge American taxpayers more for infrastructure projects like the border wall.”
I believe we are now just beginning to see the real world results of Trump’s policies on the economy, Wall Street and the jobs markets and I don’t think it will be pretty. Already GM has had to close factories in the US with the number of jobs lost in the thousands. One of the reasons the company cited was the increase in steel prices made manufacturing cars in the US too expensive to maintain GM competitive in the medium and long run. As you might recall the increase in Steele prices is a direct result of Trump’s policies. This explains why he reacted so poorly and even threatened to take away GM’s subsidies (something he cannot do without congress).
.. So why did I mention this? Because it tells me how this will go down. Trump has made a lot of off the cuff policy decisions based not on policy carefully crafted by experts or any any coherent economic strategy, but on what Trump thought made him look “tough” and “decisive” in the moment. His instinct is to demand and bully others into submission on the force of his will alone and Trump being the showman he is wanted to play to his base. His decisions didn’t result in any immediate negative changes so he just blew it off and went on to the next manufactured “tough guy” act without a second thought. But time doesn’t stop and all the actions he has taken are having serious consecuences that only now are starting to show, and it looks bad.
.. Already economic experts are predicting that the US is close to entering another recession, including very wealthy people who enthusiastically applauded Trump’s irresponsible tax cut Once the economy spirals into a recession and the average American feels the direct effect there will be no one else to blame but him.
.. Once his popularity falls below some magical number you will start to see how the well honed Republican instinct for political survival will kick in and they will start to abandon the SS Trump like rats from a burning ship.
Trump will lash out when he realizes his “allies” in Congress are no longer protecting him from the Meuller investigation with the same ferocity they once did. His first instinct is the call them traitors and poison the Republican well which might work to a degree but at some point he will realize that his options are truly limited.
.. Meuller is smart and he knows that Trump is trying to interfere, so he is most likely handing off investigations and lots of evidence to state prosecutors in as many states where possible crimes were commited as fast as he possibly can in order to keep them out of Trump’s reach. He also very likely has extensive copies of every single detail he has uncovered in safe places so that once acting attorney general and Trump stooge Mathew Whitaker inevitably brings down the hammer to stop the investigation all the information will be safeguarded so the investigation can resume from where it left off at some future point if and when the Democratic House appoints a special prosecutor.
.. If all else fails then it can be arranged so copies of the information can be “anonymously” sent to trusted people in The New York Times and other news media. The point is to deny Trump control of who sees the information and thus he looses control of the narrative. This most likely already has happened and he knows he has no way out. By this time he will also likely realize the prospects of him winning re-election are low and his Republican allies will not protect him. He knows that no matter what he does the information will come out and as soon as he is out of office he will be indicted.
.. Trump has a strong instinct of self preservation but like all bullies he is also a coward. He might talk the talk of insurrection and violence, but at the end of the day he will not be willing to put his orange hair to the fire. His lawyers will look for a deal where Trump can leave the presidency at the end of his term while appearing like he left on his own terms and he won’t make any more trouble and they will most likely get most of what they ask for. Those in power will want to avoid the serious constitutional crises and violence that indicting a sitting president will entail so they will see it in everyone’s best interest to just let him go away with as little fuss as possible.
.. The way I see it Trump will get a deal similar to what Nixon got and leave the presidency only to immediately get a blanket pardon by then president Pence. The criminal cases pending in state courts would be a whole different matter. Not only will he have to fight there, but his children will also be targeted, especially by ambitious states attorneys looking to make a name for themselves.
.. On the bright side for Trump (if you can call it that) he is 72 years old and not exactly the picture of health. The cases will take years before reaching any conclusion and that’s not counting the inevitable appeals and the man will probably die a free man before any case reaches a conclusion. His children though are fuuuuu…..