For a man who considers himself to be a dealmaker, Trump is avoiding a lot of deals

Though it is headed by a man who considers himself one of history’s greatest dealmakers, the Trump administration lately has been doing its best to avoid making deals.

The possibilities in foreign policy for a master negotiator are legion: There are Iran and North Korea with their nuclear programs; Venezuela, whose bankrupt regime presides over a major humanitarian crisis; and the Israeli-Palestinian conflict, which Trump once described as ripe for a “deal of the century.”

Yet in recent months, U.S. policy has seemingly been aimed not just at preventing accords on these problems but also at precluding bargaining by our would-be closer in chief.

Take the case of Iran. When he withdrew the United States from the multilateral deal limiting Tehran’s nuclear program, Trump said he was “ready, willing and able” to negotiate a new accord and confidently predicted that the regime of Ayatollah Ali Khamenei was “going to want to make a new and lasting deal.”

Instead, U.S. policy seeks to apply crushing pressure to the regime without offering it a way out. Last week, Secretary of State Mike Pompeo announced a bid to take Iranian oil exports “to zero” by threatening sanctions on the remaining buyers. The gambit might not work, but if it does, Tehran will face a potentially devastating economic crisis. And by Pompeo’s account, it could gain relief only if it meets a list of 12 demands adding up to a 180-degree reversal of its foreign policy.

As a practical matter, notes Ali Vaez of the International Crisis Group, “Washington’s present approach makes possible two scenarios, neither of which is promising.”

  1. Either Iran “digs in,” prompting the Trump administration to redouble its pressure; or it
  2. decides to resume its nuclear program to gain some leverage. Either way, Vaez argues, the non-negotiating strategy opens “a fraught and dangerous path.”

The administration has taken a similar approach to Venezuela, where it has imposed a drastic sanction against the regime of Nicolás Maduro — a ban on oil trade with the United States — while rejecting negotiations with his government. U.S. strategy is to force the Venezuelan military to remove Maduro and work out a transition plan with the opposition’s alternative government. But the generals have not budged, leaving Venezuelans to face a catastrophic decline in already dire living conditions.

As for the deal of the century, Trump son-in-law Jared Kushner and envoy Jason Greenblatt are expected to roll out their long-awaited Mideast peace plan in a month or two. But the administration has already sabotaged it by delivering a series of body blows to the Palestinians, from cutting off funding to the Palestinian Authority to moving the U.S. Embassy in Israel to Jerusalem.

Trump’s team seems to think it has given the Palestinians a necessary softening up. But those who know them better, such as longtime U.S. Mideast negotiator Dennis A. Ross, say it has merely triggered the deeply ingrained Palestinian penchant for defiance. Their leaders have refused to talk to Trump’s envoys since last year — and it’s probable they never will.

Then there is North Korea’s Kim Jong Un, with whom Trump has portrayed himself as negotiating. Only he hasn’t, really. At their last meeting in Hanoi, Trump proposed that the North Korean leader agree to surrender Pyongyang’s entire nuclear arsenal, plus its chemical and biological weapons, a whopping nonstarter. When Kim refused and made his own one-sided offer, Trump walked away.

The North Koreans had reason to be confounded. Before the summit, there were indications the administration would be open to a more incremental deal, in which North Korea would give up some of its nuclear capacity in exchange for limited U.S. concessions. When Trump instead struck his all-or-nothing stance, the regime blamed Pompeo and national security adviser John Bolton. Pyongyang has since demanded that Pompeo be dropped from future talks.

North Koreans are not known for rational political analysis, but in this case, they may be on to something. Bolton has a decades-long record of favoring force over diplomacy, while Pompeo has made a militantly uncompromising position toward Iran a trademark since his first election to Congress. It’s notable that the two don’t figure in the one notable negotiation in which the administration is engaged — with China over trade terms.

Trump’s first national security team, led by H.R. McMaster, Jim Mattis and Rex Tillerson, was devoted to curbing his most reckless impulses. Could it be that his second is trying to ensure that he makes no compromises?

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?

 

In Nafta Rewrite, Canada Took Cue From Mexico: Make a Big Concession

As Trump’s deadline for the negotiation neared, Canadian negotiators struggled to make the U.S. give ground

Mexican Economy Minister Ildefonso Guajardo offered advice: Make a key concession to the U.S. to break the logjam. Mexico had bent to U.S. pressure on policies aimed at shifting auto production from Mexico back north, opening the way for Mexico and the U.S. to strike a broader deal a month earlier.

.. For Canada, the equivalent of Mexican cars was dairy. Canadian negotiators had already been thinking along the same lines, and the next day, Canada sent the U.S. a document that included detailed plans for easing curbs on American milk and cheese products, a Canadian official said.

.. Two sectors drew outsize attention in the talks—auto and dairy—that came to be dubbed by some the “cars and cows” negotiations. The path to the deal had plenty of twists and gambits that backfired over the 13 months of meetings, as Mexico and Canada at times accused each other of betraying their early oath to present a united front.

The tone for the Nafta talks was set in October 2017, when Mr. Lighthizer made a number of controversial demands that would recast the pact, such as injecting a “sunset clause” making it easier for a country to terminate the pact and weakening the mechanisms allowing challenges to American trade penalties.

Among the most controversial proposals was one requiring that half the content of cars built in North America come from the U.S. Both Canada and Mexico quickly rejected that as incompatible with the core principles of an agreement designed to tighten integration of a continentwide bloc.

.. But behind the scenes, Canadian officials thought they could work with the idea. They asked a longtime trade bureaucrat to find a creative way to satisfy U.S. goals without capitulating to U.S. demands. He put together a plan that would change the criteria for what qualifies as “North American content,” in a way that would emphasize higher-value input such as software.
.. “It became clear at that stage that Lighthizer wasn’t going to give us anything at all until he knew the outcome of negotiations for the auto sector,”
.. At the end of August, Messrs. Trump and Peña Nieto announced a deal that included the requirement that 40% to 45% of North American auto content be made by workers paid at least $16 an hour.
.. Though the Nafta dairy market is worth a fraction of the auto industry—and the U.S. runs a dairy surplus with Canada—it became an important issue for Mr. Trump after he got an earful during an April 2017 visit to Wisconsin. The president made Canadian dairy a staple of stump speeches and tweets complaining about how Canada took advantage of the U.S.
.. Mr. Kushner had come to play a behind-the-scenes role in the Nafta talks, and Canada’s negotiators wanted him to see right away a document that included Canada’s formal offer on dairy. The key concession had been made and the U.S. soon responded by giving in to some of Canada’s key demands.

Trade Fight Threatens Farm Belt Businesses

Many farmers, who depend on shipments overseas for one-fifth of the goods they produce, say they are anxious

Researchers at the University of Illinois and Ohio State University estimate that over four years, a 25% tariff on U.S. soybean imports by Beijing would result in an average 87% decline in income for a midsize Illinois grain farm. The loss would pressure farmland prices, they say, prompting a more than $500,000 decline in the farm’s net worth by 2021.

.. Still, many farmers say they support the Trump administration’s trade goals of modernizing Nafta, shrinking the U.S. trade deficit and combating what they see as unfair trade practices by China. They view the president’s approach as a negotiating tactic and hope it will bear fruit by fall, when farmers will harvest their crops. Some are prepared to sacrifice financially if the U.S. economy benefits in the long run.

.. administration officials have tried to reassure farmers, saying they are considering the use of Depression-era programs, which permit borrowing of as much as $30 billion from the Treasury, as well as other tools to shield farmers from trade-related losses.

..  if farm incomes are significantly squeezed, tensions could emerge between party loyalty and farmers’ wallets. “In a close enough election even a small group can matter,” Mr. Franklin said.

.. Some farmers fear trade battles will jeopardize foreign markets for U.S. agricultural products that took decades to establish.

.. Dairy farmers have been banking on sales abroad to help absorb increasing milk supplies that have pushed down prices. Tariffs imposed on U.S. cheese exports by Mexico, the largest buyer of U.S. dairy products, add insult to injury

Trump Breaks Rules, but When Do We Start Winning?

He is in nonstop motion on North Korea, Iran and trade. What comes next?

In a press conference after his summit with Kim Jong Un, President Trump said: “Honestly, I think he’s going to do these things. I may be wrong. I mean, I may stand before you in six months and say, ‘Hey, I was wrong.’ I don’t know that I’ll ever admit that, but I’ll find some kind of an excuse.”
.. He has turned virtually the entire Washington press corps into a determined opposition and routinely calls on his own attorney general to resign.

No U.S. president has ever done these things. What has this approach produced?

Politically, it has provided his supporters the constant reassurance that he will fight for them in the most public way with anyone.

..  Within hours of the summit, a statement by China made it clear the sanctions regime is going to erode during negotiations. Restoring that leverage will be impossible. It is a big loss.

.. we have been watching the attention-getting half of Mr. Trump’s improvisational negotiating model. Where’s the rest of it? When do we get the payoff for all this activity?

.. Feeling good again about America matters. But in an unsentimental world, that isn’t the same as winning.

Debacle in Quebec

there has never been a disaster like the G7 meeting that just took place. It could herald the beginning of a trade war, maybe even the collapse of the Western alliance. At the very least it will damage America’s reputation as a reliable ally for decades to come; even if Trump eventually departs the scene in disgrace, the fact that someone like him could come to power in the first place will always be in the back of everyone’s mind.

.. I’m already seeing headlines to the effect that Trump took a belligerent “America first” position, demanding big concessions from our allies, which would have been bad. But the reality was much worse.

.. He didn’t put America first; Russia first would be a better description. And he didn’t demand drastic policy changes from our allies; he demanded that they stop doing bad things they aren’t doing. This wasn’t a tough stance on behalf of American interests, it was a declaration of ignorance and policy insanity.

.. Trump started with a call for readmitting Russia to the group, which makes no sense at all. The truth is that Russia, whose GDP is about the same size as Spain’s and quite a bit smaller than Brazil’s, was always a ringer in what was meant to be a group of major economies. It was brought in for strategic reasons, and kicked out when it invaded Ukraine.

.. There is no possible justification for bringing it back, other than whatever hold Putin has on Trump personally.

.. Then Trump demanded that the other G7 members remove their “ridiculous and unacceptable” tariffs on U.S. goods – which would be hard for them to do, because their actual tariff rates are very low. The European Union, for example, levies an average tariff of only three percent on US goods.

.. Yes, Canada imposes high tariffs on certain dairy products. But it’s hard to make the case that these special cases are any worse than, say, the 25 percent tariff the U.S. still imposes on light trucks.

.. His trade advisers have repeatedly claimed that value-added taxes, which play an important role in many countries, are a form of unfair trade protection. But this is sheer ignorance

.. they’re just a way of implementing a sales tax — which is why they’re legal under the WTO.

.. He may just have been ranting. After all, he goes on and on about other vast evils that don’t exist, like a huge wave of violent crime committed by illegal immigrants (who then voted in the millions for Hillary Clinton.)

Was there any strategy behind Trump’s behavior? Well, it was pretty much exactly what he would have done if he really is Putin’s puppet: yelling at friendly nations about sins they aren’t committing won’t bring back American jobs, but it’s exactly what someone who does want to break up the Western alliance would like to see.

.. Alternatively, maybe he was just acting out because he couldn’t stand having to spend hours with powerful people who will neither flatter him nor bribe him by throwing money at his family businesses – people who, in fact, didn’t try very hard to hide the contempt

.. this was an utter, humiliating debacle. And we all know how Trump responds to humiliation.

 

China Offers to Buy Nearly $70 Billion of U.S. Products to Fend Off Trade Tariffs

Beijing says purchase hinges on whether Trump imposes threatened tariffs

U.S. officials are skeptical of the Chinese offer for several reasons, said people involved with the talks. They argue that Chinese energy purchases would largely divert U.S. sales to other nations and have no overall impact on the U.S. trade deficit. They also aren’t sure that the U.S. could ramp up agriculture production that quickly.

.. China’s offer would benefit the Farm Belt states that helped Mr. Trump win the election in 2016. By promising to buy more American soybeans, corn and other agricultural products, China pledged to ease certain regulations to boost its imports of those goods, the people said.