Trump’s Looming Trade Wars

by Bill McClellan on Feb 1, 2017 6:00:00 PM Government Relations

12963234373_e7041316f5_m.jpgLast week I was pumping up the Trump Administration for identifying Utah Attorney General Sean Reyes as a potential Chair of the FTC along with FTC Commissioner Maureen K. Ohlhausen as the favorite for acting FTC chair. Both are seasoned consumer protection pros who would do a great job. 

Today congratulations are in order with Commissioner Ohlhausen having been appointed as the acting Chair of the Federal Trade Commission. As I noted last week, I feel a lot better about the FTC with this development.  Commissioner Ohlhausen needs no introduction to ERA having given us a speech in 2013 and again visiting with us for a fireside chat with Ed Glynn in 2015. 

Unfortunately for the President this excellent move at the FTC might be the only thing he got right last week. It was a rocky road on a number of other fronts. The administration was panned for its botched handling of executive orders on the immigration travel ban and it’s restructuring of the National Security apparatus.  These developments sucked up a lot of media attention and distracted everyone from another key story that we are keeping an eye on for ERA members.  That’s why I wanted to take this opportunity and tell you about the very real possibility that we might soon be experiencing the Trump Trade Wars.

The Opening Salvo

Last week USA Today called me to ask about what was going on with Trump’s proposed Border Adjustment Tax .  Long story short it would create a border tax on imported goods from other countries to be sold in the U.S. market.  While details of this proposal are currently in flux, many reports suggest that the administration is targeting a rate of 20%. This proposal was first discussed in the context of trade with Mexico and seen as a financing mechanism to pay for a wall on the U.S. border.  However, other published reports have suggested that China and Germany might also be added for inclusion in the levy. 

If enacted this could be a large shock to the direct response ecosystem that we will be working on your behalf to avoid. So if you import from China, Mexico or Germany it is time to start paying attention.

Unfortunately, this worrying development is only an opening salvo in a much larger battle that will see an assault on the concept of free trade with governments aggressively acting in their own national interests to the detriment of importers and exporters the world over.  Clearly the world of trade might look very different sooner rather than later.

Trump’s Other Trade Moves (So Far)

Life comes at you fast these days. While we are only 10 days into the Trump administration there have already been a number of other trade related developments.  First, President Trump ditched our participation in the TTP. Also known as the Trans-Pacific Partnership, this free-trade agreement was designed to deepen economic ties between the 12-nations who were signatories including: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru and Singapore.

That’s not all.  Now the President has targeted the North American Free Trade Agreement (NAFTA) for renegotiation, calling it “the single worst trade deal ever approved in this country”.

The Return Fire

All of this “America First” trade action has the world on edge.  In fact the New York Times just published an article entitled “Trump’s Trade War May Have Already Begun” while I was composing this blog post.  I agree with much of the analysis in it and recommend you take a moment to read it.

Needless to say the threatened countries in Asia, Latin America and Europe are not taking the threat to their livelihood lying down.  Countries potentially affected are exploring strengthening ties with other trade partners.  But that’s not all. They are also exploring ways to return fire that would hurt President Trump’s base. 

It’s too early to tell if this is just the President jawboning as a negotiating tactic or the real deal. However, one thing is certain, we here at ERA will continue to keep you informed of developments as they unfold. So stay tuned to this blog.  As you know, we will also push the administration and Congress hard to minimize the effects on the ERA ecosystem as these potential trade battles unfold.

 Photo Courtesy of: Steven Straiton

 


Bill McClellan joined ERA in January 2003 as director of government affairs. Prior to joining the association, Bill worked as a lobbyist at the Georgia Automobile Dealers Association, covering the state legislature and Georgia's congressional delegation. Before working for the GADA, Bill managed political campaigns at both the congressional and state constitutional levels

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