Former Trump Trade Official: Take Tariff Threats Seriously

A former Trump administration trade official said he can't predict whether a global 10% or 20% tariff will be imposed early under a potential new Trump administration, or exactly how tariffs on Chinese goods might be hiked, but Akin partner Clete Willems said he's telling business people to take these ideas seriously, even if every proposed change doesn't come true.

"Trump’s a tariff man, make no mistake, but he’s also a dealmaker," Willems said at an Asia Society Policy Institute webinar on how trade policy could change under a second Trump presidency or a Harris administration. He said some of these tariff announcements might be "to start a dynamic for negotiation," but he wouldn't say that doesn't mean they won't come to pass.

Businesses that engage in international trade are taking his advice to heart. National Foreign Trade Council President Jake Colvin, in a meeting with reporters earlier this week, said he wasn't sure that those in the Trump campaign who were saying the threat of global tariffs is just a negotiating tactic are right. The lesson from the last time Donald Trump "was in office is: you have to take what the principal says seriously," Colvin said.

Wiley partner Greta Peisch, former general counsel in the Office of the U.S. Trade Representative, said despite Vice President Kamala Harris' criticism of Trump's tariff approach as inflationary, the Democratic presidential nominee wouldn't be likely to remove Section 301 tariffs on Chinese consumer goods, despite her criticism of Trump's tariff approach as inflationary.

"I frankly wouldn’t expect there to be much change" to Section 301 tariffs for several years, Pesich said, given the four-year review just finished, and the outcome was higher tariffs on certain goods and no products removed from the lists.

"That said, the 301 statute is very flexible about making changes," she added. If China's distortionary practices improved or worsened, "you could see a shift up or down."

Peisch said she expects a Harris administration would continue to avoid negotiating comprehensive trade liberalizing free trade agreements, but said the current pause in international negotiations for digital trade standards would end.

She also said that a Harris administration would likely redouble efforts for coordinated defensive action with climate change-fighting components like the global arrangement for steel and aluminum -- and that those sectoral agreements could include liberalizing trade in those products among partners.

Willems said Trump does want to focus on U.S. offensive trade interests, whether that's reinstituting Section 301 processes for countries that have passed digital service taxes, or trying to convince China to buy more U.S. exports.

The phase one agreement with China lowered tariffs in exchange for purchase promises that largely did not come to pass; Willems said there could be phase one enforcement under a second Trump administration. He said, "We’re trying to maximize trade [with China] in the areas where we think it’s OK."

He also said he thought Trump may seek to do sectoral trade agreements in Southeast Asia, if not comprehensive FTAs.

"The Trump administration was before, and will be, much more interested in opening up markets for U.S. companies, fighting for U.S. companies abroad," he said.

The webinar also hosted Asia trade observers, such as Gita Wirjawan, a former trade minister in Indonesia, and now an investment banker in the country. Wirjawan said Indonesia and other Southeast Asian countries are frustrated with what he called Democrats' overly intellectual trade talks. He said Indonesia has no problem with improving intellectual property protections or "embracing human rights," but that in order to sell a deal in parliament, there needs to be an economic benefit for Indonesian citizens -- such as promised investments that would allow Indonesia to move up the value chain.

Wirjawan said Southeast Asia sees Trump as more transactional, and "in some ways," they prefer his trade approach.

Japanese business professor Takemasa Sekine said that a 10% or 20% tariff on Japanese exports to the U.S. would have a strong negative impact on Japan's economy, but at the same time, he said, Japanese citizens don't think there would be a significant difference between Harris and Trump. While Trump would be more likely to impose border measures, he said, they think Harris could make it more difficult for Japanese exporters by subsidizing U.S. producers. He also noted if bipartisan political opposition to Nippon Steel's acquisition of U.S. Steel results in a ban on the sale, it will create a chilling effect on Japanese investment in the U.S.

Trump has called the Indo-Pacific Economic Framework another Trans-Pacific Partnership -- which he withdrew from -- and Sekine said that if the U.S. leaves IPEF, Japan will take up the mantel to continue it, as it did with the TPP. "I am thinking TPP should embrace some developments of the IPEF," he said.