New trade deals re­main on hold

Busi­nesses still wait­ing on Trump’s planned re­boots

Northwest Arkansas Democrat-Gazette - - BUSINESS & FARM - ALAN RAPPEPORT

WASH­ING­TON — Don­ald Trump promised Amer­i­cans that they would be ex­hausted from “win­ning” on trade un­der his pres­i­dency. But nearly seven months af­ter Trump took of­fice, the in­dus­tries he vowed to pro­tect have be­come tired of some­thing else: wait­ing.

Af­ter be­gin­ning his pres­i­dency with a bang by with­draw­ing from the Tran­sPa­cific Part­ner­ship pact in Jan­uary, in­dus­try lead­ers and an­a­lysts say Trump has ac­com­plished lit­tle else of sig­nif­i­cance when it comes to re­ori­ent­ing deals with other coun­tries. In­stead, his ad­min­is­tra­tion has been con­sumed by in­ves­ti­ga­tions into pos­si­ble Rus­sian col­lu­sion and a failed at­tempt to re­peal the Af­ford­able Care Act.

Amer­ica’s steel­work­ers are wait­ing for Trump to ful­fill his prom­ise to levy tar­iffs on steel im­ports. Home builders want the pres­i­dent to cut a deal with Canada to end a dis­pute over its soft­wood lum­ber ex­ports. And cat­tle ranch­ers are long­ing for a bi­lat­eral pact with Ja­pan to ease the flow of beef ex­ports.

“It’s frus­trat­ing be­cause of the im­pact it’s hav­ing on the in­dus­try,” Leo Ger­ard, pres­i­dent of United Steel­work­ers In­ter­na­tional, said of the de­layed out­come of a highly an­tic­i­pated steel in­ves­ti­ga­tion. “It’s cre­at­ing a cri­sis that’s be­ing ex­ac­er­bated.”

The Com­merce Depart­ment was poised to de­liver a re­port to Trump by the end of June with rec­om­men­da­tions for steel tar­iffs, on the ground that cheap im­ports pose a na­tional se­cu­rity threat. But the process be­came bogged down when in­dus­tries that buy steel ob­jected and other coun­tries threat­ened re­tal­i­a­tion. Trump said re­cently that deal­ing with steel was no longer a top pri­or­ity, and Wil­bur Ross, the com­merce sec­re­tary, sig­naled to mem­bers of Congress in brief­ings last month that a de­ci­sion was no longer im­mi­nent.

Ger­ard said for­eign com­peti­tors had been flood­ing the U.S. mar­ket with steel prod­ucts in an­tic­i­pa­tion of the tar­iffs. Some of this is

hap­pen­ing in parts of the coun­try that voted for Trump. “This has been a bit of a let­down in the in­dus­trial heart­land,” said Ger­ard, who is based in Pitts­burgh. “A lot of our mem­bers sup­ported the pres­i­dent be­cause of what he said about steel and man­u­fac­tur­ing.” But steel only scratches the sur­face. One ac­com­plish­ment that Trump has notched on trade has been an agree­ment with China that opened its mar­ket to U.S. beef ex­ports. For the beef in­dus­try, how­ever, the ben­e­fits of that deal pale in com­par­i­son with the cost of aban­don­ing the Trans-Pa­cific Part­ner­ship, which had been spear­headed by Pres­i­dent Barack Obama. It would have pro­vided ac­cess to the Ja­panese mar­ket. In­stead, Ja­panese tar­iffs on U.S. frozen beef, which would have de­clined un­der Obama’s deal, are on the rise. They in­creased last week mak­ing Amer­ica’s meat even more vul­ner­a­ble to com­pe­ti­tion from coun­tries such as Aus­tralia. “TPP was fan­tas­tic,” said Kent Ba­cus direc­tor of in­ter­na­tional trade for the Na­tional Cat­tle­men’s Beef As­so­ci­a­tion. “When you walk away from it with­out a mean­ing­ful al­ter­na­tive, that causes a lot of alarm in the beef in­dus­try.” De­spite the de­lays, the pace of ac­tion on trade is ex­pected to pick up soon. In the com­ing days, the U.S. trade rep­re­sen­ta­tive is ex­pected to un­veil a trade case ac­cus­ing China of ex­ten­sive vi­o­la­tions of in­tel­lec­tual prop­erty. On Aug. 16, the United States, Mex­ico and Canada are to be­gin talks on rene­go­ti­at­ing the North Amer­i­can Free Trade Agree­ment, which Trump threat­ened this year to ter­mi­nate be­fore re­vers­ing course. These moves will come with their own set of risks. Ba­cus, for in­stance, said NAFTA, while much de­rided by Trump, had been a boon for beef ex­ports. He is hop­ing Trump makes only mod­est ad­just­ments to the terms of trade with Amer­ica’s neigh­bors and moves quickly to strike a trade deal with Ja­pan, whose $1.5 bil­lion mar­ket is the big­gest and most im­por­tant one for beef. Trade ex­perts say the slow move­ment on trade is an­other ex­am­ple of the ad­min­is­tra­tion’s re­al­iz­ing that gov­ern­ing is more com­pli­cated than cam­paign­ing. “I think what the Trump ad­min­is­tra­tion has learned is that trade pol­icy is re­ally, re­ally hard and when you ac­tu­ally start to think about mak­ing pol­icy changes, any pol­icy change that you make is go­ing to hurt some­body and they are go­ing to make that known,” said Chad Bown, a se­nior fel­low at the Peter­son In­sti­tute for In­ter­na­tional Eco­nom­ics. “Any time you im­ple­ment a tar­iff or take a tar­iff away, there’s go­ing to be win­ners and losers.” And im­pos­ing tar­iffs to pro­tect one do­mes­tic in­dus­try of­ten does dam­age to an­other. The most prom­i­nent re­cent ex­am­ple comes from the home con­struc­tion in­dus­try. At a cam­paign speech to the Na­tional As­so­ci­a­tion of Home Builders in Mi­ami a year ago, Trump waxed nostalgic about his fa­ther’s days in the busi­ness. “I’m so com­fort­able in this busi­ness, and it taught me so much,” he said to a round of ap­plause. In April, the Trump ad­min­is­tra­tion an­nounced that it would im­pose new tar­iffs on Cana­dian soft­wood lum­ber, say­ing the ex­ports are un­fairly sub­si­dized. The pro­posed tar­iffs, which could be as high as 24 per­cent, have al­ready led to a spike in lum­ber prices. Ac­cord­ing to Bloomberg data, they are up nearly 18 per­cent this year. That has put the squeeze on U.S. home builders, who rely heav­ily on Cana­dian lum­ber. The United States im­ported $5.7 bil­lion in soft­wood lum­ber last year, mainly for res­i­den­tial build­ing. “The in­crease in cost is due to the trade war with Canada,” said Ger­ald Howard, chief ex­ec­u­tive of the Na­tional As­so­ci­a­tion of Home Builders. “The avail­abil­ity of Cana­dian lum­ber is at risk, so the price is go­ing higher.” Builders are look­ing to Europe and Rus­sia for lum­ber be­cause Canada has be­come so ex­pen­sive, Howard said. They are also pass­ing on costs to buy­ers, which could be­come a drag on the hous­ing mar­ket. The in­dus­try’s lob­by­ing group wants the Trump ad­min­is­tra­tion to quickly reach a new deal with Canada on lum­ber. It also hopes that Trump will re­mem­ber his roots in the in­dus­try. “The pres­i­dent strongly be­lieves in what’s go­ing on with the tar­iffs, and he has pur­sued pro­tec­tion­ist poli­cies in this area,” Howard said. “We dis­agree with him.”


Ve­hi­cles are loaded onto a con­tainer ship in the Port of Oak­land in Oak­land, Calif., in July. In­dus­try lead­ers and an­a­lysts say the U.S. has ac­com­plished lit­tle of sig­nif­i­cance when it comes to re­cent ne­go­ti­a­tions on trade deals with other coun­tries.

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