Matt Peterson, who is a senior editor at The Atlantic, has written an informative article in that journal that sheds some light on the Trump/Lighthizer trade strategy.
His central thesis is that “Donald Trump came to office with a vision of a raging global trade war. In some tellings, the war is his glorious conquest. In others, Hillary Clinton launched the invidious assault, which is being waged against American workers through the North American Free Trade Agreement (a deal negotiated before her husband ever took office, let alone her time as secretary of state) and the Trans-Pacific Partnership (which Clinton disavowed as a candidate). Whoever started the fire, it is clear that Trump sees trade battles as defining his presidency. But confusion over the basic details of the strategy—Should America be fighting Canada? China? Both at once?—have ensured that this war will have few winners … [and, he concludes that] … if what Lighthizer — and Trump along with him — really wants is a global showdown with China, it’s not clear that the NAFTA talks leave the U.S. better positioned. Obama had brought along not just Canada and Mexico in the TPP, but also Japan, Australia, and several other countries. Trump, instead, has dropped most of those countries from his economic foreign policy and alienated the ones that remain. That’s a remarkable feat given the near-consensus that America does in fact face a serious economic threat from China. “The business community’s view is that we need more leverage with China,” said John Murphy, the senior vice president for international policy at the U.S. Chamber of Commerce. “The way to get that is by building a common front with Europe, Japan, and others. As part of that, we need to resolve the steel and aluminum tariffs, and move past a multifront trade war” … [but] … Trump made clear this week that he wants war on all fronts. In an interview with Bloomberg, he repeated his threats to withdraw from the WTO. That would require an act of Congress, but Trump’s trade team can create plenty of trouble for the institution without formally withdrawing. But without a defined strategy, and led by a general whose whims change with the weather, that might be all Trump’s trade wars add up to. Not massive protectionist changes to the global trading system, but unending trouble for many of the lives it touches.” I agree with that analysis. President Trump, it seems to me, wants to go to war on all fronts at the same time and he doesn’t differentiate between his real, big, powerful enemies, like China, and competitive trading partners like Canada … he just wants to fight us all at once and win every single battle.
But the part of Mr Peterson’s article that really fascinated me is his analysis of Robert E Lighthizer’s views. “Robert Lighthizer,” he says, “the former steel lobbyist who serves as chief negotiator in his role as U.S. trade representative, has testified that his goal is to bring manufacturing back to the United States. The new nafta deal shows the lengths he’s willing to go to do that. The new rules deliberately make trade in cars less free, in order to shelter American jobs. “It’s not clear to me how you could characterize their goal as anything other than protectionism,” said Simon Lester, a trade-law expert at the Cato Institute … [and] … When Lighthizer was confirmed by the Senate last year, he brought something entirely new to the job: contempt for America’s tradition of unbridled free trade. Trade policy, he wrote in 2008, “is merely a tool for building a strong and independent country with a prosperous middle class.” That point of view has driven an approach to trade conflict that resembles the total-war mentality of World War II. Anything goes in the effort to bring manufacturing jobs back to America—even measures that might otherwise damage the broader industries that house those workers. It’s not just Mexico. The administration’s tariffs on China take the same approach. According to research by the Peterson Institute for International Economics’s Mary Lovely and Yang Liang, the tariffs “target multinational supply chains.” In other words, instead of targeting exclusively Chinese companies that dump goods into the U.S. market, the Trump administration is targeting the Chinese-made components Google uses to build the Nest thermostat sold in the U.S. As with Mexico, the administration is punishing companies that manufacture abroad rather than in the U.S. That’s a big change from the decades America spent building deals like NAFTA that let its companies spread their supply chains across the world.” Matt Peterson uses the specious “national security” excuse that the Trump regime used to justify tariffs of steel and aluminum to illustrate his contention that “Lighthizer is primarily concerned about protecting the American steel industry from cheap Chinese imports, but once that’s done, why not use the leverage created against the nato-member Canada? “They are unjustified and illegal,” said Canadian Foreign Minister Chrystia Freeland on Friday. But U.S. officials seem unfazed. In Senate testimony in July, Lighthizer explained, “Not to suggest that army tanks are coming in from Canada, but if you made a decision that it’s in the national interest to save the steel industry, then you have to put in place a program that works.”” In the Lighthizer/Trump world view, it seems to me, America has no friends, at all, just competitors and enemies … and it’s bloody hard to differentiate one from the other: if you compete with America, they seem to say, then you’re an enemy.
For the next few years, at least, Canada (and Australia and Britain, too) had best get used to the idea that we, like China, are being seen as America’s enemy. Mr Lighthizer seems to see the Canadian auto sector, for example, as something that should reside (completely?) in America. It’s going to be hard for Canada to stay in NAFTA and join the TPP, too.
Good luck to Team Canada when negotiations with Mr Lighthizer resume later today.