Trump targets trade deficit
Effect on U.S. job creation questioned
WASHINGTON - President Donald Trump signed a pair of executive orders Friday focused on reducing the trade deficit just days before he holds his first meeting with his Chinese counterpart.
Trump’s aides insist the timing is coincidental, but the administration is touting the moves as evidence that it is taking an aggressive but analytical approach to closing a trade gap that is largely because of the influx of goods from China. Some experts say the orders suggest the president may be taking a softer tack on trade.
The first order gives the Commerce Department 90 days to assemble a report on the factors behind the trade deficit, while the second seeks to increase collection of duties on imports.
In remarks in the Oval Office, Trump said he’d seen first-hand as he traveled the country how bad trade deals had hurt American workers.
“The jobs and wealth have been stripped from our country,” he said, vowing to put that to an end. “We’re bringing manufacturing and jobs back to our country.”
The president had been expected to sign the orders after giving his remarks, but left before he signed them. A White House official said he signed the orders later.
Several economists said it’s unlikely the planned report would address the broader economic forces behind the trade imbalance, since it would track trade deficits country by country and product by product. And the order on trade duties appears to duplicate the standards of a trade enforcement act signed into law by then-President Barack Obama in 2016, according to congressional staff.
“It seems like there is less here than
meets the eye,” said Robert Scott, director of trade and manufacturing policy research at the left-leaning Economic Policy Institute.
Together, the orders appear to be a symbolic shot at China, which accounted for the vast majority — $347 billion — of last year’s $502 billion trade deficit.
Trump referenced his meeting with China in his remarks in the Oval Office.
“We’re going to get down to some very serious business,” he said. “It’s been very bad what’s been happening to our country, in terms of our companies and in terms of our jobs.”
But Peter Navarro, director of the White House National Trade Council, stressed the orders had nothing to do with Trump hosting President Xi Jinping of China at his estate in Florida next week.
“Nothing we’re saying tonight is about China. Let’s not make this a China story. This is a story about trade abuses; this is a story about an undercollection of duties,” he told reporters at a Thursday evening briefing.
Trump took an adversarial tone with China in a Thursday evening tweet, but he also appeared to dampen expectations about the meeting with Xi at his Mar-a-Lago estate.
“The meeting next week with China will be a very difficult one in that we can no longer have massive trade deficits … and job losses,” he wrote.
This may be an acknowledgment that any meaningful progress with China could be slow, said David Dollar, a former World Bank and U.S. Treasury Department official.
“The tweet is trying to set low expectations,” said Dollar, now a senior fellow at the Brookings Institution.
The best outcome for the Trump administration, Dollar said, would be claiming “we talked tough to the Chinese and told them what to expect.”
By ordering a report in 90 days, the administration is setting expectations with trade partners that Trump will move from sweeping claims about trade abuses to a granular command of facts.
The report would identify “every form of trade abuse and every non-reciprocal practice that now contributes to the U.S. trade deficit,” said Commerce Secretary Wilbur Ross.
“It will demonstrate the administration’s intention not to hip-shoot, not to do anything casual, not to do anything abruptly, but to take a very measured and analytical approach,” Ross said.
Despite Trump’s campaign rhetoric, Ross said the report would not focus extensively on currency manipulation, which is under the purview of the U.S. Treasury Department.
Trump has portrayed trade deficits as strangling economic growth and devastating factory jobs at home. But foreign trade has also created savings by U.S. consumers for helping to reduce prices for clothing, cars and furniture, among other items.
While economists concede the benefits of trade can be uneven, they argue the job losses that Trump blames on trade pacts can largely be attributed to automation. A study released this week by the National Bureau of Economic Research estimates that robots account for up to 670,000 lost factory jobs between 1990 and 2007.