Trading Partners View Trump's Tariff Move Less Than Favorably
STEVE INSKEEP, HOST:
Maggie Haberman of The New York Times wrote - Trump is becoming engulfed by the chaos he creates every day as a show for his viewing pleasure. Haberman wrote this at the end of a week when the many presidential plotlines we just heard about included an abrupt announcement on trade. He proposed tariffs on imported aluminum and steel. So let's talk through that trade announcement with Wendy Cutler, a former deputy U.S. trade representative in the Obama administration. Good morning.
WENDY CUTLER: Good morning.
INSKEEP: If the president says we're doing tariffs, do they just happen?
CUTLER: Well, he has the authority to impose tariffs against imports of other countries, so if he wants to do them, he can do it.
INSKEEP: OK. And in this case, is this something that is going to have an impact around the world?
CUTLER: Absolutely. Our trading partners are not going to view this favorably.
INSKEEP: So wait a minute. You're talking about the European Union. German officials have been saying to the Associated Press that the president risks sparking a trade war specifically with the closest U.S. allies. Is that - is that who's most affected here, countries like Germany?
CUTLER: Well, a lot of our allies are affected by this measure, including Germany, Mexico, Canada, Japan and Korea.
INSKEEP: Although also the United States, correct? The president has criticized cheap Chinese steel over the years - or rather also China is what I'm trying to say. Is it correct?
CUTLER: China will be hit as well, but what people need to keep in mind is China is now our 11th-largest source of steel imports. So the measures on steel are going to hurt a lot of other countries a lot more than China.
INSKEEP: Now, with all of this said, the president got on Twitter this morning and talked about trade. And he said if the U.S. has a trade deficit, quote, "trade wars are good and easy to win. Example - when we're down $100 billion with a certain country and they get cute, don't trade anymore. We win big. It's easy." Is it that easy to win a trade war if you're the United States?
CUTLER: No one wins a trade war. Just talk to our farmers, our auto companies, our airplane manufacturers. Everyone loses from a trade war. If other countries close their markets to our exports, that hurts U.S. companies and their workers and will ripple through our economy.
INSKEEP: But the calculation the president is making, at least in this tweet, is that if we have a trade deficit with a country and we shut down that trade, our - there's a net gain for the United States. Is that just not true?
CUTLER: I can't follow that logic. I think while we might gain in one sector, we'll lose in another sector. And there will be a net loss given our reliance on overseas markets for growth and employment.
INSKEEP: Is this much true, Wendy Cutler, that U.S. administrations, Republican and Democrat, have been somewhat stymied as to how to approach constant U.S. trade deficits with the rest of the world because the United States simply supports free trade? There are a lot of American companies that depend on it, depend on imports, depend on doing some exports. And it is hard to strike back against countries that do not trade the same way.
CUTLER: Well, we can strike against countries that pursue unfair trade practices, and we should do that, but trying to use trade to balance trade deficits is not the way to go. Really macroeconomic factors have a lot more to do with our trade deficits. We, as a nation, consume a lot. We don't save a lot. And by definition, that can lead to a trade deficit.
INSKEEP: Oh, and that creates motivation to buy things from overseas, even if you try to slap tariffs on certain products.
INSKEEP: Wendy Cutler, thanks very much.
CUTLER: Thank you.
INSKEEP: She was a former deputy U.S. trade representative during the Obama administration. Transcript provided by NPR, Copyright NPR.