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How Trump's Threats Of Tariffs Could Affect Future Negotiations

Jun 13, 2019
Originally published on June 13, 2019 6:10 pm
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MARY LOUISE KELLY, HOST:

All right. Let's stay with trade and trade fights and bring in someone who has fought quite a few of them. Wendy Cutler was a U.S. trade negotiator for nearly 30 years, serving under five presidents. And she's in the studio now. Welcome.

WENDY CUTLER: Thank you.

KELLY: So I want to focus us on this Mexico tariff fight and how it ended and ask what lessons other countries, China in particular, might be taking from it. If you were President Xi sitting in Beijing, watching this play out these last couple of weeks, what is your takeaway?

CUTLER: I think the takeaway for China and our other trading partners is that you can't count on the United States as a reliable trading partner. Canada and Mexico recently concluded a trade agreement with the United States. It dealt with tariffs. It was supposed to provide certainty and open markets. And all of the sudden, the president is talking again about increasing tariffs. So there's no certainty. There's no guarantee that you're going to really achieve open markets if you conclude a trade deal with the United States.

KELLY: That the U.S. might turn around and try to apply pressure in another way to deal with another unrelated matter.

CUTLER: Well, exactly. And the tariffs that were threatened against Mexico last week weren't even with respect to a trade issue. They were being used to achieve a foreign policy objective. And so the bandwidth of using tariffs as a tool to prompt actions from other countries has expanded dramatically. And that's a lesson and something other countries, I'm sure, are taking into consideration as they move forward and decide whether they want to negotiate with us, No. 1, and if so, what kind of safeguards should they try and put in any trade agreements so they can achieve the certainty and gain access to our market.

KELLY: I want to circle back to that, but let me stay with China for a second because China is very different from Mexico. I mean, the obvious point being they're - China's bigger; China's richer. Can they afford to play hardball in a way that Mexico might not have been able to, might not have felt it was able to?

CUTLER: Absolutely. And we're seeing that now. China is not capitulating to President Trump's threats about imposing tariffs if, you know, China doesn't do what he wants them to do. And so while maybe tariffs were effective with China in bringing them to the negotiating table, they really haven't been effective in achieving a deal. You know, the negotiations broke down about a month ago, and both sides have not resumed talks.

KELLY: You nodded to the point that with Mexico tariffs were used as an economic tool to try to compel action on a non-economic matter - immigration. Is that a model you would like to see the U.S. repeat in other parts of the world?

CUTLER: I don't think it's a good idea. I think if you're going to take trade actions, you should take trade actions in response to trade actions that other countries have taken.

KELLY: Although the Trump administration argues it worked - we had White House trade adviser Peter Navarro on NPR this morning saying this was a success, the president got what he wanted.

CUTLER: Well, maybe for now he did and maybe with respect to immigration. But what does this mean for the other priority of the administration? That is the USMCA, which...

KELLY: Which is the NAFTA successor deal.

CUTLER: ...The NAFTA successor deal that the administration is trying to gain congressional approval for right now. If you're in Congress and you're being asked to vote on this and there's a prospect that in 45 days we may be hitting Mexico with tariffs, do you want to take that politically tough decision and raise your hand and say you're going to support this deal? Need to think about that.

KELLY: I mentioned that over your career as a trade negotiator, you served five presidents. You served Democrats and Republicans. Do you see any aspects of President Trump's style that resonate with the way other administrations have done it? I mean, this president, whether you like his tactics or not, he's not the first one to deploy uncertainty and destabilizing the adversary you're negotiating with in negotiations like this.

CUTLER: And absolutely. And I've been an unpredictable negotiator, as well.

KELLY: I mean, you know the value. It works.

CUTLER: It's a great tactic. If your counterpart can game out your every move, you've lost your effectiveness. But I think the key point is that unpredictability, it works up to a certain point. And then it really starts to have negative results.

KELLY: That was former U.S. trade negotiator Wendy Cutler. She's now vice president of the Asia Society Policy Institute. Thank you for dropping by.

CUTLER: Thank you very much. Transcript provided by NPR, Copyright NPR.