While China needed to be effectively confronted over its trade policies toward the U.S., the way the Trump administration did it was antiquated, counter-productive and overly negative, according to three experts on doing business in China who spoke Thursday at the Aspen Security Forum.<\/p>\n
Further, President Donald Trump\u2019s recent threat to impose tariffs on Mexico over immigration worries U.S. trading partners and undermines future trade agreements America is trying to negotiate, according to a panel of trade experts who also spoke Thursday at the Forum.<\/p>\n
\u201cLook what he did to Mexico after signing a trade agreement (with them),\u201d said Rufus Yerxa, president of the National Foreign Trade Council. \u201cThat\u2019s a good example of his mindset.\u201d<\/p>\n
Trump backed down on the threat to impose the Mexican tariffs.<\/p>\n
But William Reinsch, a senior business adviser at the Center for Strategic and International Studies, said Trump\u2019s Mexican tariff threat sent a clear message.<\/p>\n
\u201cThat message was mostly for other countries: \u2018If we make a deal with this gang, is it going to stick?\u2019\u201d Reinsch said. \u201cI think it spooked the Chinese. It\u2019s clearly bothering the Europeans and the Japanese. It\u2019s worrying the Koreans, who have a completed deal.\u201d<\/p>\n
The Mexican tariff threat makes it less likely that the U.S. under Trump will be able to negotiate other multi-lateral or bilateral trade agreements, Yerxa said.<\/p>\n
Susan Schwab, a former U.S. trade representative under President George W. Bush, said American trade negotiators have to be credible to get results.<\/p>\n
Current negotiations with Japan over a trade agreement are off to a slow start and \u201cnot likely to succeed,\u201d Schwab said. Also, an agreement with the United Kingdom cannot even begin to be negotiated until the details of Brexit are worked out, she said.<\/p>\n
Meanwhile, the European Union is negotiating free-trade agreements \u201cand we are left behind,\u201d Schwab said.<\/p>\n
As for the trade war with the Chinese, Schwab gave Trump credit for getting China\u2019s attention, which she said the Obama administration was never able to do.<\/p>\n
However, the Trump administration\u2019s trade paradigm harkens back to the way it worked before the proliferation of rules-based trade agreements and the creation of the World Trade Organization in 1995, Reinsch said. At the time, there were fewer constraints on U.S. trade actions than now, he said.<\/p>\n
Yerxa said the administration\u2019s trade stance, in which it acts like China, is a mistake.<\/p>\n
\u201cWe should strengthen, not abandon, the rules-based system,\u201d he said.<\/p>\n
A more effective way to negotiate with China is through a coalition of countries, which could more easily make them agree to fairer trade rules, Yerxa said.<\/p>\n
The idea of pressuring China using a coalition of countries also came up in the discussion about whether business can succeed China, which followed the forum\u2019s talk on trade and tariffs.<\/p>\n
Tom Pritzker, executive chairman of Hyatt Hotels Corp., said the larger scale of support provided by alliances is the best way to respond to China\u2019s business and trade policies. The country has a very different history, culture and set of values than Western countries, who created the world order, he said.<\/p>\n
\u201c(They say) \u2018Why should we change to accommodate you? We\u2019re not the ones who need to change,\u2019\u201d Pritzker said.<\/p>\n
Those companies who do business in China are now divided over whether the Trump administration\u2019s trade policies are counter-productive or terrific, said Stephen Orlins, president of the National Committee on U.S.-China Relations. Some are a victim of \u201cpromise fatigue\u201d by the Chinese, who long promised reforms but have not delivered, he said.<\/p>\n
One-third of American companies with production in China have shifted it elsewhere in the last year, said Anja Manuel, principal at the Silicon Valley-based consulting firm of RiceHadleyGates.<\/p>\n
Others like Hyatt, which is set to hire 50,000 Chinese employees, continue to operate until the Chinese no longer feel they\u2019re getting the better deal, Pritzker said.<\/p>\n
\u201cWe are aligned with Chinese interests at the moment,\u201d he said. \u201cIf we fall out of alignment, we may be in trouble.\u201d<\/p>\n
Any trade deal between the U.S. and China probably isn\u2019t coming very soon, Reinsch said.<\/p>\n
That\u2019s because the structural reforms Americans want in the Chinese economy would reduce state control, and Chinese President Xi Jinping \u201cis never going to do that,\u201d he said.<\/p>\n
\u201cTrump\u2019s choice is to accept less or continue the war,\u201d Reinsch said.<\/p>\n
But don\u2019t expect Trump to accept anything until far closer to the 2020 election, he said, when he\u2019ll trumpet whatever it is as the best deal ever, sell it on the campaign trail and not have to deal with the consequences of whatever the agreement\u2019s results might be, he said. If he takes a deal earlier, he risks letting Democrats hammer him on possible negative results, Reinsch said.<\/p>\n