Looking Back - Trump and Trade
International Trade & Customs Update
Date: January 09, 2017
President-elect Donald Trump made international trade policy a major focus of his campaign. Here is a sweeping look back on his myriad positions on trade in an effort to gauge what his policies will be and how they might affect U.S. businesses in the global marketplace during a Trump administration.
7 Point Plan
Trump’s “7 Point Plan To Rebuild the American Economy by Fighting for Free Trade,” which was published in June 2016, outlined his trade priorities if elected president. The 7 Point Plan, as published on his website, states that Trump will:
“1. Withdraw from the Trans-Pacific Partnership [TPP], which has not yet been ratified.
2. Appoint tough and smart trade negotiators to fight on behalf of American workers.
3. Direct the Secretary of Commerce to identify every violation of trade agreements a foreign country is currently using to harm our workers, and also direct all appropriate agencies to use every tool under American and international law to end these abuses.
4. Tell NAFTA [North American Free Trade Agreement] partners that we intend to immediately renegotiate the terms of that agreement to get a better deal for our workers. If they don’t agree to a renegotiation, we will submit notice that the U.S. intends to withdraw from the deal. Eliminate Mexico’s one-side[d] backdoor tariff through the VAT [value-added tax] and end sweatshops in Mexico that undercut U.S. workers.
5. Instruct the Treasury Secretary to label China a currency manipulator.
6. Instruct the U.S. Trade Representative to bring trade cases against China, both in this country and at the WTO [World Trade Organization]. China's unfair subsidy behavior is prohibited by the terms of its entrance to the WTO.
7. Use every lawful presidential power to remedy trade disputes if China does not stop its illegal activities, including its theft of American trade secrets - including the application of tariffs consistent with Section 201 and 301 of the Trade Act of 1974 and Section 232 of the Trade Expansion Act of 1962.”
Trade with China
Three of Trump’s seven trade points deal with China. During the campaign, Trump raised serious concerns with China’s “manipulation” of the yuan to make its exports less expensive and with its “unfair” competitive behavior. According to Trump, China’s theft of American trade secrets and other illegal activities are harming U.S. businesses. Trump vowed to impose tariffs on China to “stop the cheating,” and threatened to defeat China’s “unfair subsidy behavior” by bringing trade cases against China both in the United States and at the WTO. Further, Trump vowed to utilize every presidential power available to him to stop trade disputes and the theft of U.S. trade secrets, applying tariffs as needed.
Trump unequivocally stated that he believes the United States should renegotiate its trade deals because they are unfair and disadvantageous to U.S. companies. Trump indicated that trade agreements, as they currently stand, are defective, one-sided and incentivize U.S. companies to move jobs abroad. As a result, Trump seeks to renegotiate agreements and favors bilateral agreements, which allow the United States to walk away from negotiations if the terms do not meet his expectations.
Multiple times, Trump strongly advocated renegotiating the terms of NAFTA with threats of withdrawing from the agreement entirely if it is not renegotiated more favorably for the United States. Calling NAFTA a “total and complete disaster” that is “defective” and “the worst trade deal ever signed,” Trump has made it a priority for renegotiation, signaling his willingness to abandon it completely if new terms do not offer a better deal for U.S. workers.
Trump repeatedly reiterated that he intends to withdraw from the TPP and will do so within the first 100 days of taking office. Trump claimed that to participate in the TPP is “insanity,” as the agreement should not be supported or allowed to happen in any way.
Trump claimed to favor free trade and reject isolationist policies; however, he also stated that globalism provides a misplaced sense of economic security. While Trump appreciates the benefits that international trade provides, he indicated that he can negotiate better-crafted trade deals that create more jobs and higher wages, unlike “incompetent” leaders who are “dummies.” Trump emphasized his skepticism of multinational and plurilateral treaties and agreements to achieve economic success. In particular, Trump said, “We will no longer surrender this country or its people to the false song of globalism. The nation-state remains the true foundation for happiness and harmony.”
Although left out of his 7 Point Plan, countries such as Cuba and Iran and U.S. companies choosing to manufacture abroad were targets of President-elect Trump throughout the campaign.
Similar to his positions on other trade agreements, Trump claimed that the relaxation of sanctions against Cuba only benefits the Castro regime and does nothing for the religious and political freedom of the Cuban people. Trump stated that he will reverse President Barack Obama’s executive orders related to normalizing relations between the United States and Cuba once he is in office.
Trump plans to end U.S. participation in the Joint Comprehensive Plan of Action (JCPOA), signed in July 2015, which lifted certain sanctions on Iran in exchange for Iran’s agreement to halt its military nuclear ambitions and to allow monitoring of Iran’s civil nuclear program by the International Atomic Energy Agency. Trump forcefully stated that dismantling the JCPOA is his number one priority and outlined a three-fold strategy to do so: (1) standing up to Iran’s aggressive push to destabilize and dominate the region, (2) dismantling Iran’s global terror network, and (3) enforcing the terms of the previous deal and holding Iran accountable to its terms.
U.S. Companies Manufacturing Abroad
For U.S. companies manufacturing goods or components abroad (or planning to move production abroad) and then importing the items into the United States, Trump warned that they must be stopped from leaving or face punitive taxes if they do so to remedy any unfair advantage gained by their departure. Trump blamed special-interest politicians for allowing this to happen and specified that companies taking such action will face an import tariff as high as 35 percent.
In October, as part of his 100-Day Plan covering top administration priorities, Trump included approximately half of the items in his 7 Point Plan covering trade; Trump, however, did not include any plans concerning Cuba, Iran or U.S. companies manufacturing abroad.
Thompson Hine’s International Trade & Customs practice group will be monitoring Trump’s trade activities and policies. To track these developments as they occur, please visit our Trump and Trade website at TrumpAndTrade.com.
FOR MORE INFORMATION
For more information, please contact any of the following members of the International Trade & Customs practice group:
David M. Schwartz
Samir D. Varma
Scott E. Diamond
Senior Legislative & Regulatory Policy Advisor
Not licensed to practice law
This advisory bulletin may be reproduced, in whole or in part, with the prior permission of Thompson Hine LLP and acknowledgment of its source and copyright. This publication is intended to inform clients about legal matters of current interest. It is not intended as legal advice. Readers should not act upon the information contained in it without professional counsel.
This document may be considered attorney advertising in some jurisdictions.
© 2017 THOMPSON HINE LLP. ALL RIGHTS RESERVED.