cawacko
Well-known member
His trade talk completely turns me off but I guess it's possible he's playing chess while we're playing checkers.
Is Donald Trump’s Trade Talk Confusing on Purpose?
Some experts see a strategy for approaching negotiations with China and other countries
During the presidential campaign, Donald Trump threatened across-the-board tariffs on Mexico and China. He also warned he would “break” the North American Free Trade Agreement.
But since he has been elected, he has largely shelved that rhetoric and focused instead on convincing some high-profile companies not to send jobs abroad. His trade advisers have been mostly quiet.
What to make of this?
Some investors and trade experts say the uncertainty about Mr. Trump’s trade plans could give him leverage. Trading partners*may fear the U.S. really would engage in trade war if it doesn’t get its way—but also may have some hope that a Trump administration would be open to a reasonable deal.
“The question is to what extent the new administration is really going to increase protectionism, and to what extend the threat of increasing protectionism is a means to negotiate a new bilateral trade agreement,” said Mitch Zacks, who helps manage $4.8 billion at Zacks Investment Management in Chicago.
Mr. Zacks points out the U.S. is less dependent on exports than other major economies, so—in theory at least—could endure a trade disruption better than most of its big trading partners.
When it comes to China, Mr. Trump has “now created an opportunity for a new style of engagement that’s very different from how both the Obama administration and the Bush administration were dealing with China, which may be a good thing,” said Chad Bown, senior fellow at the Peterson Institute for International Economics, a Washington think tank that backs freer trade.
Perhaps. But others in Washington worry that Mr. Trump could overplay his hand and push too hard. For instance, Chinese officials reacted heatedly when the president-elect linked the delicate strategic issue of Taiwan relations to efforts to deal with China on trade.
For the moment, markets don’t seem too worried about a trade war. The Dow Jones Industrial Average—chock-full of multinationals and importers that would suffer under big tariffs—is up 9.1% since Nov. 7. (On the other hand, U.S. Steel Corp. has jumped 77%, an indication investors expect the industry to be protected from foreign rivals.)
Mr. Trump is getting advice on trade from steel-industry veterans who have successfully brought antidumping suits against China, South Korea and Japan. While those battles have been politically fraught, none has led to widespread trade disruptions.
It’s unclear whether any of those transition officials, who include former Nucor Corp. CEO Dan DiMicco, will become members of the administration. On Wednesday, Mr. Trump appointed vocal China critic Peter Navarro to lead a new National Trade Council at the White House.
It’s possible the mere presence of such officials at the negotiating table could help win concessions from other countries. “It makes it credible when the person probably would like some protectionism,” Mr. Zacks said. Mr. Trump would need to wrap any concessions into an international framework if he wants partner countries to stick with their commitments under future presidents, Mr. Bown said.
The emphasis on leverage and multiple approaches to dealing with adversaries comes straight from Mr. Trump’s book, “The Art of the Deal.”
“The best thing you can do is deal from strength, and leverage is the biggest strength you can have,” Mr. Trump wrote. “I never get too attached to one deal or one approach.”
http://blogs.wsj.com/economics/2016...ps-trade-talk-confusing-on-purpose/?mod=e2twe
Is Donald Trump’s Trade Talk Confusing on Purpose?
Some experts see a strategy for approaching negotiations with China and other countries
During the presidential campaign, Donald Trump threatened across-the-board tariffs on Mexico and China. He also warned he would “break” the North American Free Trade Agreement.
But since he has been elected, he has largely shelved that rhetoric and focused instead on convincing some high-profile companies not to send jobs abroad. His trade advisers have been mostly quiet.
What to make of this?
Some investors and trade experts say the uncertainty about Mr. Trump’s trade plans could give him leverage. Trading partners*may fear the U.S. really would engage in trade war if it doesn’t get its way—but also may have some hope that a Trump administration would be open to a reasonable deal.
“The question is to what extent the new administration is really going to increase protectionism, and to what extend the threat of increasing protectionism is a means to negotiate a new bilateral trade agreement,” said Mitch Zacks, who helps manage $4.8 billion at Zacks Investment Management in Chicago.
Mr. Zacks points out the U.S. is less dependent on exports than other major economies, so—in theory at least—could endure a trade disruption better than most of its big trading partners.
When it comes to China, Mr. Trump has “now created an opportunity for a new style of engagement that’s very different from how both the Obama administration and the Bush administration were dealing with China, which may be a good thing,” said Chad Bown, senior fellow at the Peterson Institute for International Economics, a Washington think tank that backs freer trade.
Perhaps. But others in Washington worry that Mr. Trump could overplay his hand and push too hard. For instance, Chinese officials reacted heatedly when the president-elect linked the delicate strategic issue of Taiwan relations to efforts to deal with China on trade.
For the moment, markets don’t seem too worried about a trade war. The Dow Jones Industrial Average—chock-full of multinationals and importers that would suffer under big tariffs—is up 9.1% since Nov. 7. (On the other hand, U.S. Steel Corp. has jumped 77%, an indication investors expect the industry to be protected from foreign rivals.)
Mr. Trump is getting advice on trade from steel-industry veterans who have successfully brought antidumping suits against China, South Korea and Japan. While those battles have been politically fraught, none has led to widespread trade disruptions.
It’s unclear whether any of those transition officials, who include former Nucor Corp. CEO Dan DiMicco, will become members of the administration. On Wednesday, Mr. Trump appointed vocal China critic Peter Navarro to lead a new National Trade Council at the White House.
It’s possible the mere presence of such officials at the negotiating table could help win concessions from other countries. “It makes it credible when the person probably would like some protectionism,” Mr. Zacks said. Mr. Trump would need to wrap any concessions into an international framework if he wants partner countries to stick with their commitments under future presidents, Mr. Bown said.
The emphasis on leverage and multiple approaches to dealing with adversaries comes straight from Mr. Trump’s book, “The Art of the Deal.”
“The best thing you can do is deal from strength, and leverage is the biggest strength you can have,” Mr. Trump wrote. “I never get too attached to one deal or one approach.”
http://blogs.wsj.com/economics/2016...ps-trade-talk-confusing-on-purpose/?mod=e2twe
