Trump On The Brink Of Blowing Yet Another Trade Agreement
Well, they’ve done it again – taken a proposed trade agreement all the way to the one-yard line, then fumbled it.
President Trump and Japanese Prime Minister Shinzo Abe were planning to sign a bilateral trade agreement on Wednesday, but Abe backed out because the Americans kept demanding changes to the text, according to Asahi News of Tokyo.
You will recall that this is exactly what President Trump accused the Chinese of doing after China and the U.S. reached a tentative agreement on a trade deal.
Mireya Solis, a Japan expert at the Brookings Institution, said that Tokyo “wants assurance in writing that the United States won’t turn around and use national security” as a rationale for imposing tariffs on Japanese auto imports.
They also want language added to the agreement saying they would withdraw from it if the United States imposes those tariffs.
Trump has a report from the Commerce Department that says auto imports threaten national security. That empowers him to invoke Section 232 of the Trade Expansion Act of 1962. It allows the president to impose tariffs and/or quotas on the imports in question and to leave them in place for as long as he wants.
Needless to say, Japanese leaders think the idea that Hondas, Toyotas and Nissans exported to the United States threaten U.S. national security is ludicrous. So does anyone else in his or her right mind.
Do American cars threaten the national security of Canada or Mexico or any other country that imports them? If Trump imposes Section 232 tariffs, some of those countries might answer that question in the affirmative.
A request for comment from the Office of the U.S. Trade Representative went unanswered. A spokesperson for the Japanese Embassy in Washington couldn’t be reached.
Japan’s legislature, the Diet, will convene on Oct 4 and adjourn in early December. The U.S. House of Representatives has 45 legislative days left this year and is scheduled to adjourn for the year on Dec. 12. Both have to approve the trade agreement for it to take effect. So does the U.S. Senate, which is scheduled to adjourn on Dec. 13.
It’s worth noting that Japan has no car tariff. It’s also worth noting that about 70% of Japanese cars sold in the U.S. were built in North America, “with the vast majority being built in the U.S.” according to the Japanese Automobile Manufacturers Association.
If Trump doesn’t back down on his car tariff threat, the Japanese won’t walk away, Solis said. “They’ll say, ‘we’ll continue to talk.’”
One would think that the opportunity to get a trade deal done this year, even a limited one like the Japan agreement, would compel Trump to make a reasonable concession. He has failed to close a deal with China and he has failed to close a deal with the European Union. He has closed a deal with Canada and Mexico, but whether Congress will ratify it remains to be seen.
So, Trump is in danger of going into an election year with no trade agreements in hand. This was one of his signature issues during his 2016 campaign. He said then that would tear up trade agreements negotiated and signed by his predecessors and replace them with better ones. After 32 months of his presidency, American businesses, farmers and workers are still waiting for him to make good on that promise.
All Trump has to do is assure the Japanese government in writing that he will never invoke Section 232 against Japan. That doesn’t seem like a lot to ask, and without that assurance, there will be no deal.
The world awaits his decision with bated breath.