President Donald Trump’s ongoing experiments in “the art of the trade deal” are proving to be a white-knuckle experience. Currently in Asia for economic and diplomatic talks, the president and his administration have raised some valid points about trade imbalances. However, his tactics may ricochet back and hurt U.S. industries he is trying to help.
A case in point: U.S. farmers have realized a lot of benefits from the North American Free Trade Agreement, the 1994 pact between the U.S., Canada and Mexico.
It’s also true that farmers who have benefited from the deal would also like it to be a bit better — but not blown to smithereens. Northwest wheat growers say the pact has opened up the Mexican market, increasing exports by 400 percent. At the same time, they have gripes about Canadian wheat pricing.
Everyone wants to keep what works, and fix what doesn’t. But anytime you renegotiate, you run the risk of the other country’s fix causing trouble. That’s part of normal negotiations. These are hardly normal negotiations. By sometimes threatening an outright cancellation of NAFTA, the president puts political theatrics ahead of effective negotiating tactics.
Late last month, dozens of major agriculture trade groups warned the Trump Commerce Department that NAFTA withdrawal would cause “immediate, substantial harm to American food and agriculture industries and to the U.S. economy as a whole.” Even the threat of such an abrupt turnaround in U.S. policy has our trading partners looking around for options for sales and purchases — in China, for example.
“If the president were to withdraw from NAFTA, I think that would cause a lot of problems in farm country,” Ben Conner, director of policy for U.S. Wheat Associates, said. “The president has a lot more negotiating experience than I do, but if they’re trying to make counterparts in Canada and Mexico concerned, it also has us alarmed.”
Pick up the president’s book, “The Art of the Deal.” Written in 1987, the book outlines Trump’s 11-step formula for negotiations. Step No. 5 is “use your leverage” — walk away if you can’t get what you want.
“The worst thing you can possibly do in a deal is seem desperate to make it,” Trump wrote. “That makes the other guy smell blood, and then you’re dead.”
Is Trump threatening to abandon trade treaties to gain leverage, or will he walk away in the hope of making a better, bigger deal some other day? Such doubts — whether about wheat, airplanes or the host of other products Northwest states export — are not beneficial.
There’s ample reason to be wary. Trade negotiations in the age of Trump are not for the faint of heart. Stand by for the next White House tweet.