Doug Schoen: Trump better get our trade policy right, or China will take our place as the global economic leader

The recent G20 conference in Argentina left many Americans, and the stock market, flummoxed about trade policy and the posture of the United States. While not a particularly flashy topic, trade is about the United States’ position in the world, our foreign policy agenda, and our relationships with our allies; Americans should have a sense … Continue reading “Doug Schoen: Trump better get our trade policy right, or China will take our place as the global economic leader”

The recent G20 conference in Argentina left many Americans, and the stock market, flummoxed about trade policy and the posture of the United States. While not a particularly flashy topic, trade is about the United States’ position in the world, our foreign policy agenda, and our relationships with our allies; Americans should have a sense of certainty and stability about our policies and positions on this crucial matter.

But today there is so much uncertainty, and the trade impasse with China highlights the dysfunction and ineffectiveness of the current White House strategy.

A truce seems to have been reached while negotiations between the U.S. and China are underway. President Trump has announced that he will delay until March 1 a planned rate hike on the $200 billion worth of Chinese goods that are already tariffed at 10 percent. And the Chinese have reportedly shown their desire to move forward by buying more American agricultural products and lowering tariffs on American-made automobiles. However, it is unclear if these measures will translate into positive and substantive changes for American businesses.

U.S. Trade Representative Robert Lighthizer recently said, “When I talked to the President of the United States, he's not talking about going beyond March. … He's talking about getting a deal. If there is a deal to be gotten, we want to get it in the next 90 days.” And yet the president is doing little to make a deal more likely.

For example, after discussing a 90-day tariff freeze with the Chinese at the G20 summit, President Trump immediately turned around, called himself “tariff man,” and publicly boasted about all of the tariffs he could put on Chinese goods if the negotiations are not successful. This engenders neither clarity nor certainty, and it doesn’t set the stage for a successful deal.

Given the lack of clarity on both sides, it is no surprise that the stock market has dropped more than 1,000 points this month. Commentators have increasingly noted that the resilience in the market, which we saw last year, is gone. The status of our trade negotiations and relationship with China is now having a real impact.

There is a message here for the president: Unless we have a stable, clear and unambiguous policy regarding our trade relationship with the Chinese – beyond simply soaking them with more and more tariffs – we are going to lose our position as the global economic leader.

President Trump’s tariff policy has been game tested, and it does not appear to be working – and not only for Wall Street investors who’ve seen their entire year's gains wiped away. Now, farmers across the Midwest are losing access to international markets and are beginning to see their revenues slashed. While it is not impossible that the president could get lucky and emerge as a “stable genius of trade,” that is looking less likely by the day.

Republican Congressman John Curtis of Utah said this week, “We have started this [trade war] and we have to finish it. We don't really have a choice. … We need to be looking at what we can do to minimize the damage. It's impacting those that can least afford it." Rep. Curtis is right. If the Trump administration isn’t careful, stocks may enter a bear market, American farmers may permanently lose access to international markets, the U.S. economy may enter a recession, and China may complete its ascent to become the world's foremost economic power.

And make no mistake – trade policy is a serious political problem for the president. We saw in the last election that it’s not enough to run on just immigration. What will get President Trump re-elected is a strong and growing economy built upon a stable set of pro-growth policies that advance our economic position domestically and globally. And that requires us to have clear trade values and goals that are articulated in accordance with China.

I cannot say with greater fervor how much I want the president and his policies to succeed. Every right-minded American should. Ultimately, the markets, the economy, the Trump presidency, and the American people will benefit from a stable set of trade policies.

Douglas E. Schoen is a Fox News contributor. He has more than 30 years experience as a pollster and political consultant. His new book is “Putin’s Master Plan”.. Follow him on Twitter @DouglasESchoen.

Huawei executive’s arrest will not hinder trade talks with China, Kudlow says

Despite a strain in the relationship between Beijing and Washington following the arrest of an executive of Chinese electronics giant Huawei in Canada at the U.S.’ behest, one of President Trump’s top economic advisers doesn’t believe trade talks between the two superpowers will be affected.

White House Economic Adviser Larry Kudlow said on “Fox News Sunday” that while some issues still need to be sorted out between the U.S. and China, the trade talks between the countries are going well.

“China has finally issued some very positive statements,” Kudlow said. “They agree with the timetable. They agree with the deadlines."

Kudlow added: “There are a lot of good things out there.”

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The major issue of contention between Washington and Beijing at the moment is the December 1 arrest of Meng Wanzhou in Vancouver trying to evade U.S. trade curbs on Iran.

Meng, the daughter of Huawei's founder, was detained at the request of the U.S. during a layover at the Vancouver airport on the same day that Trump and his Chinese counterpart, Xi Jinping, agreed over dinner to a 90-day cease-fire in a trade dispute that threatens to disrupt global commerce.

The U.S. alleges that Huawei used a Hong Kong shell company to sell equipment in Iran in violation of U.S. sanctions. It also says that Meng and Huawei misled American banks about its business dealings in Iran.

Huawei is the biggest global supplier of network gear for phone and Internet companies and has been the target of deepening U.S. security concerns over its ties to the Chinese government. The U.S. has pressured European countries and other allies to limit use of its technology, warning they could be opening themselves up to surveillance and theft of information.

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Meng's arrest has threatened to increase U.S.-China trade tensions and shook stock markets globally last week. But U.S. Trade Representative Robert Lighthizer, speaking on CBS' "Face the Nation," downplayed the impact of the arrest on trade talks between the two countries aimed at defusing the tensions.

"It's my view that it shouldn't really have much of an impact," he said.

The surprise arrest raises doubts about whether the trade truce will hold and whether the world's two biggest economies can resolve the complicated issues that divide them.

The Associated Press contributed to this report.

Cherry farmers say US-China trade war has made business go sour: ‘They’re upset, clearly’

DUVALL, Wash. – When it comes to the impact of Chinese tariffs on U.S. farm goods, sweet cherries are the canary in the coal mine.

Unlike other commodities that can be stored, cherries are perishable. They’re picked, packed and sold right away. When China’s tariff went from 10 percent to 50 percent last July, right in the middle of the harvest, exports to China went from the most profitable to the pits.

Growers in Washington state, by far the largest producer of sweet cherries in the U.S., saw their bumper crop lose $86 million in value overnight.

Unlike other commodities that can be stored, cherries are perishable. They’re picked, packed and sold right away. When China’s tariff went from 10 percent to 50 percent last July, right in the middle of the harvest, exports to China went from the most profitable to the pits. (iStock)

“They’re upset, clearly,” said Mark Powers, president of the Northwest Horticultural Council. “I mean they are patriotic, they want to do the right thing, they understand that there are problems with our trade relationship with China.”

Washington Fruit and Produce Company in Yakima saw exports plunge 54 percent after the tariffs were raised. It’s made it extra painful because Chinese consumers pay a premium for American produce.

Growers fear they’ll lose their best foreign market to competitors in Turkey and South America and never get it back. They worry about where this trade war is heading.

“Because we are such a small share, we really don’t like to be used as the pawn,” said Frank Davis.

Soybeans grown in the Midwest are a much bigger player, accounting for 60 percent of the $20 billion of food exports to China. A Nebraska Farm Bureau report recently released said the retaliatory tariffs have cost state growers $1 billion. Farmworkers lost another $200 million in income.

Supporters of President Trump say farmers need to keep the big picture in mind.<br>“I think a lot of farmers are feeling the pain right now,” said Doug Erickson, a senator in the Washington state Legislature. “But I think a lot of them understand it’s important for America overall to have fair trade relationships.” (The Associated Press)

Supporters of President Trump say farmers need to keep the big picture in mind.

“I think a lot of farmers are feeling the pain right now,” said Doug Erickson, a senator in the Washington state Legislature. “But I think a lot of them understand it’s important for America overall to have fair trade relationships.”

Agriculture officials say that day is coming.

“Certainly, by next fall, we will be back to a more robust, more even fair tariff-free trading relationship,” said Bill Northey, USDA Undersecretary.

Farmers hurt by the tariff war are getting some relief from a one-time $12 billion aid package. But a growing refrain from a national campaign called ‘Tariffs Hurt the Heartland’ is they want trade—not aid.

Dan Springer joined Fox News Channel (FNC) in August 2001 as a Seattle-based correspondent.

Liz Peek: Trump scores big wins at the G-20

He came, he saw, and he took yet another step towards Making America Great Again.

President Trump scored major successes at the G-20 summit that concluded over the weekend in Argentina. Specifically, the community of nations agreed in their official communique to “necessary reform” of the World Trade Organization, a top White House priority, and recognized the decision of the U.S. to withdraw from the Paris Climate Accord, and to still utilize “all energy sources and technologies, while protecting the environment.”

In addition, the Chinese promised to up their purchases of U.S.- made goods and to discuss other demands in exchange for postponing an expected hike in tariffs; President Xi also committed to designating the deadly drug Fentanyl as a controlled substance in China, and vowed to help with de-nuclearizing North Korea.

It was an all-round win-win for the president, who needed one. The White House has been buffeted anew by the ongoing Mueller investigation and also by threats of further inquiries and subpoenas from Democrats who are taking control of the House in the aftermath of the midterm elections.

Moreover, Trump’s signature efforts to reboot the tepid economy – efforts which have been by any standard hugely successful – have lately collided with his trade battles with China and other countries.   The still-challenging landscape for manufacturing in the U.S. was highlighted recently by GM’s announcement that it would be laying off nearly 15,000 workers.

Investors, too, have shown their concerns over Trump’s tariffs on steel and aluminum. The stock market has been volatile, worried about rising costs, Federal Reserve rate hikes, and slowing global growth.

Bottom line: the G-20 produced some good news for the president, the country and markets. Over the past several months, anti-Trump hyperventilating by the left has obscured the progress the administration has made in boosting growth, hiring and wages. People in the U.S. are better off than they were, as shown by elevated consumer confidence and robust spending. Those workers at GM in danger of losing their jobs are at least being terminated when there are, according to the JOLTS survey, more than 7 million jobs currently unfilled.

Hanging over the booming economy, though, has been the ongoing battle over trade, which some describe as a self-inflicted wound by the White House. But President Trump is correct: the international playing field is not level and it needs to be fixed.

President Trump is not intent on overthrowing the rules-based order, as critics charge; he wants to make it better.

There is no plausible reason why we charge imported European cars a tariff of only 2.5 percent, while the EU imposes a 10 percent tax on cars exported from our country. There is no excuse for the fact that Europe imposes higher tariffs than the U.S. in 17 of 22 major consumer goods categories, as Commerce Secretary Wilbur Ross argued in an op-ed last year.

Our problems with the EU pale in comparison with the damage done to our country over time by China. It is impossible to detail the many ways in which the Chinese have cheated the U.S. From demanding that our companies operating there share their trade secrets to sending scientists to spy on our universities to hacking into our corporations’ most proprietary information, Beijing has engaged in a decades-long pursuit of our intellectual property, no holds barred.

They have also used subsidies of state-owned enterprises to crush international competition and thrown up endless barriers to companies wanting to compete in China.

These are not new allegations. In 2013, the National Bureau of Asian Research published the IP Commission Report, which detailed China’s misbehavior – cheating which led them to agree with the “assessment by the Commander of the United States Cyber Command and Director of the National Security Agency, General Keith Alexander, that the ongoing theft of IP is “the greatest transfer of wealth in history.”  Millions of jobs and hundreds of billions of dollars in valuable intellectual property were vanishing into China each year.

The relentless quest for technology that allowed China to climb the value chain, to rise from manufacturing t-shirts to fighter jets, has been aided and abetted by our biggest businesses, and by the World Trade Organziation. Multinational corporations have put up with Beijing’s cheating because they wanted access to China’s growing consumer market. Only recently have they become more outspoken about China’s abusive practices. The WTO has put up with it because no one demanded a change.

Until now. President Trump is not intent on overthrowing the rules-based order, as critics charge; he wants to make it better. The recent G-20 gathering was a step in the right direction. It could not have happened without the clear threat of punitive tariffs on Chinese exports. The trade skirmish has slowed China’s growth to the weakest level in a decade, damaged their currency, and rocked their stock market. Leading indicators for China’s economy are dropping, with manufacturing and exports weakening. Pressure on President Xi as he traveled to the G-20 was extreme; his leadership has recently been publicly criticized, a rare and unwelcome slap at his increasingly autocratic rule.

China cannot be trusted to follow through on its promises. But, Americans can celebrate the determination of the Trump White House to keep the pressure on. In 90 days, if Beijing prevaricates, tariffs will increase. Of that there is no doubt.

President Trump will get no credit from the liberal press for the progress being made in our trade relations. But open-minded Americans should consider this: it would have been very easy in the lead-up to the midterm elections for the White House to have announced some sort of deal with Beijing, aimed at pleasing Trump-supporting farmers who have suffered from the trade battles or business leaders who fear for their bottom lines. Such an announcement would have buoyed stock prices and helped GOP candidates tout the strong economy.

The Trump White House has instead committed itself to exposing and correcting a serious problem that has hurt American workers and businesses and should be applauded by all; I’m not holding my breath.

Liz Peek is a former partner of major bracket Wall Street firm Wertheim & Company. A former columnist for the Fiscal Times, she writes for The Hill and contributes frequently to Fox News, the New York Sun and other publications. For more visit LizPeek.com. Follow her on Twitter @LizPeek.

US, China agree to 90-day truce to hash out trade differences

The U.S. and China have agreed to a 90-day truce in a bid to work out their trade differences. The news came Saturday following a dinner meeting between President Trump and Chinese leader Xi Jinping at the Group of 20 summit in Buenos Aires.

As part of the detente, Trump agreed to delay plans to raise tariffs on $200 billion in Chinese goods that would have taken effect Jan. 1. China agreed to buy a “substantial amount” of agricultural, energy and industrial products from the U.S. to reduce the trade deficit.

"It's an incredible deal," Trump told reporters aboard Air Force One, on his way back to Washington. "What I'll be doing is holding back on tariffs. China will be opening up, China will be getting rid of tariffs. China will be buying massive amounts of products from us."

"It’s an incredible deal. What I’ll be doing is holding back on tariffs. China will be opening up, China will be getting rid of tariffs. China will be buying massive amounts of products from us."

— President Donald Trump

The temporary agreement will give both nations time to iron out their differences. If not, the $200 billion in planned tariffs will go into effect.

Trump has already imposed tariffs on $250 billion on Chinese products. In response, China slapped taxes on $110 billion in American goods.

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The meeting came during Trump’s weekend trip to Argentina where he canceled a meeting with Russian President Vladimir Putin amid tensions between Russia and Ukraine. He also canceled a Saturday news conference following the death of former President George H.W. Bush.

"It's great the two sides took advantage of this opportunity to call a truce," said Andy Rothman, investment strategist at Matthews Asia. "The two sides appear to have had a major change of heart to move away from confrontation toward engagement. This changes the tone and direction of the bilateral conversation."

China also conceded to label fentanyl, the synthetic opioid cited in thousands of drug deaths, as a controlled substance and agreed to reconsider a takeover by U.S. chipmaker Qualcomm that it had previously blocked.

China nixed the proposed purchase of Dutch semiconductor manufacturer NXP by the chipmaker over antitrust concerns.

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White House press secretary Sarah Sanders said China's decision to label the drug as a controlled substance means that "people selling fentanyl to the United States will be subject to China's maximum penalty under the law."

The U.S. has pressured China to take a tougher stance against the drug, which is 50 times more powerful than heroin. Most of the U.S. supply of the drug is made in China.

Washington has also accused Beijing of selling trade secrets and forcing American companies to hand over technology in exchange for access to Chinese markets.

The Associated Press contributed to this report.

Trump signs trade deal with Mexico, Canada as pact faces Democratic opposition in Congress

President Trump, his Mexican counterpart Enrique Pena Nieto and Canadian Prime Minister Justin Trudeau have officially signed the replacement to NAFTA, in the wake of the Trump administration enacting tariffs on steel and aluminum products from Canada and Mexico, which sparked retaliatory tariffs and negotiations with the two countries.

The new deal, the United States-Mexico-Canada Agreement (USMCA), was signed between the nations on the sidelines of the G20 meeting in Argentina.

But it still faces an uphill battle in Congress, with some top Democrats in the House and Senate saying they are not convinced the new agreement is good enough for America.

USMCA, which was finalized last month, replaces the North American Free Trade Agreement (NAFTA), which had been repeatedly criticized by Trump as being unfair to Americans and the country’s industry.

“This has been a battle, and battles sometimes make great friendships,” Trump said at the beginning of the signing ceremony.

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The new agreement doesn’t lift the tariffs on steel and aluminum, with both the Mexican and Canadian governments stating their displeasure that the issue has not yet been solved.

Trudeau used the signing ceremony to point that further cooperation is needed and alluded to the existing tariffs on steel.

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Even as Trump celebrates the new deal as a win for the country, the agreement still needs to be ratified by the new Congress, where Democrats believe the new deal doesn’t protect American workers.

Many Democrats, emboldened by their victory in the midterm election earlier this month, say they want to the deal to protect American workers from low-wage Mexican competition.

While such concerns may reverberate with the Trump administration’s economic populist message, pro-free trade Republicans may be wary of embracing Democrats’ suggestions.

Massachusetts Sen. Elizabeth Warren, a likely 2020 presidential candidate, said she will oppose the new deal, saying it won’t stop the “serious and ongoing harm NAFTA causes for American workers.” (AP)

“It’s going to be a very tough sell,” said Democratic Rep. Bill Pascrell of New Jersey, top Democrat on the House subcommittee that oversees trade issues.

Massachusetts Sen. Elizabeth Warren, a likely 2020 presidential candidate, said she will oppose the new deal, saying it won’t stop the “serious and ongoing harm NAFTA causes for American workers.”

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In a speech on Thursday, Warren said the agreement “won’t stop outsourcing, it won’t raise wages, and it won’t create jobs. It’s NAFTA 2.0.”

“We need a new approach to trade and it should begin with a simple principle: Our policies should not prioritize corporate profits over American paychecks,” Warren said. “That should be true for NAFTA and true for every deal we cut.”

"We need a new approach to trade and it should begin with a simple principle: Our policies should not prioritize corporate profits over American paychecks."

— Massachusetts Sen. Elizabeth Warren

She added that she will vote on the deal only if President Trump revises it.

The USMCA will also need to be ratified by the legislatures of Canada and Mexico.

In Mexico, Andrés Manuel López Obrador will also take over the presidency from Nieto, though he indicated his support for the new agreement.

The Associated Press contributed to this report.

Lukas Mikelionis is a reporter for FoxNews.com. Follow him on Twitter @LukasMikelionis.

Trump is winning on trade — Don’t let the ‘experts’ fool you

All of the so-called policy “experts” in Washington, D.C. throw up their hands every time President Trump announces a new round of tariffs. They issue dire warnings about how his stance will undercut our economy. But his hardball tactics are working.

The United States has hemorrhaged middle-class manufacturing jobs for more than a generation thanks to feckless policymakers in Washington who have refused to punish countries and companies that abuse our trade rules. President Trump is reversing that trend by calling out serial violators of international trade law and imposing real penalties to prevent continued abuse.

The new trade deal between the U.S., Mexico and Canada, which is set to be signed on Friday, is President Trump’s hallmark achievement on trade and illustrates the effectiveness of his strategy. By ripping up a legacy trade deal that his predecessor threatened to dismantle (but never actually touched), the president won major concessions from two of our top trading partners, who would have continued benefiting from a one-sided relationship if they hadn’t been forced to negotiate.

The United States-Mexico-Canada Agreement (USMCA) updates the 24-year-old North American Free Trade Agreement (NAFTA) in a way that fundamentally re-balances the trade relationship between the three countries. The deal will benefit American workers across countless industries, including farmers and ranchers who will gain improved access to the Canadian and Mexican markets. Congress should ratify it without delay.

President Trump understands how senseless it is to keep following the old playbook. He campaigned on a pledge to change how the U.S. does business with its trade partners and has followed through on that pledge since taking office.

Once USMCA is finalized and American industries and workers are protected by equitable terms, the president will have another opportunity to boost domestic manufacturing and agriculture by revisiting tariffs on steel and aluminum produced in Canada and Mexico. Doing so would improve the economy by relieving some of the strains on industries that depend on aluminum and steel imports from either country.

The administration can also help alleviate financial pressure on other American businesses that were the victims of retaliation by both countries. For example, Mexico slapped a 20 percent tariff on pork exports from the U.S., hurting American pig farmers who are critical to our agricultural economy. Canada and Mexico have already pledged to withdraw their retaliatory tariffs if the U.S. adds them back to the list of tariff-exempt countries.

The overarching objective of President Trump’s trade fights is to force China to the negotiating table. By improving the terms of other trade relationships, the president is strengthening his leverage for the showdown with China.

That is why it is important to make sure we have deals in place that bring our supply chains back from China to the West. Thus, reexamining tariffs for steel and aluminum produced in Canada and Mexico will ultimately be an important step towards a more fair and balanced trade relationship with China.

Most of the policy wonks who criticize President Trump simply do not understand leverage. For years, they championed the benefits of free trade, arguing that strict adherence to the rules and a consistent message would help us preserve our perch as the world’s top economy.

What they didn’t realize is that other countries were gaming those rules to take advantage of our workers, by producing goods at artificially low prices that American rivals could never match. This resulted in a hollowed-out American industrial class.

President Trump understands how senseless it is to keep following the old playbook. He campaigned on a pledge to change how the U.S. does business with its trade partners and has followed through on that pledge since taking office.

He knows we need to ignore the old rules and start to outsmart the bullies. That is the only way American workers can compete with countries that have been abusing our trade laws.

The ultimate sign of President Trump’s success on trade is that many of his skeptics are starting to embrace his worldview. Even former Treasury Secretary Hank Paulson is rethinking the U.S. approach to China. Others are sure to follow.

President Trump is winning. So is America. His critics may not see that, but that doesn’t matter, because voters do.

Steven Cheung previously served as special assistant to the president and director of strategic response at the White House. Prior to the White House, he worked on the Donald J. Trump  for President campaign as its director of rapid response. Follow him on Twitter at @CaliforniaPanda

Trump will meet with Chinese president, but trade uncertainty will persist with a divided Congress

After an unusually bitter election, Democrats will assume control of the House of Representatives in January. This means that the future of the Trump administration’s policy agenda is more tentative than ever, particularly with regard to trade.

As an assistant secretary at the U.S. Treasury and before that the staff director of the U.S. Senate Finance Committee, I spent much of my career advancing many of the president’s policy goals, including policies that impact international trade.

Now, key elements of the president’s trade agenda face major hurdles in Congress at a time when the administration is hoping to make progress with China. This likely will mean more anxiety and instability in the business community.

Trade policy is a key economic issue that affects all Americans. Leaders within the administration must develop a plan to deal with the coming political gridlock. At the same time, business leaders and investors must consider the potential impact a legislative stalemate could have on supply chains, valuations, financial markets, and other key factors in the coming months.

The administration recently struck a deal to replace the North American Free Trade Agreement (NAFTA) with the new United States-Mexico-Canada Agreement (USMCA). While this was one of the president’s most noteworthy achievements to date, the agreement may never be ratified with Democrats controlling the House. That could cause even more uncertainty.

If the USMCA fails to make it through Congress, NAFTA will remain in effect. However, the president could elect to unilaterally withdraw from the existing agreement, either as a strategy for leveraging a vote on the USMCA, or to fulfill a campaign promise.

The U.S. economy continues to hum along, but there are warning signs of potential tough times ahead, and a prolonged trade war, backed by both parties, can only exacerbate such conditions.

While unlikely, such a turn of events would be extremely disruptive for countless American industries, including farmers and auto manufacturers, among many others.

Yet such a scenario does not have to come to pass. House members should abide by their pledge to reach across the aisle and promptly ratify USMCA as a demonstration of its good faith and its commitment to protecting Americans from the destabilizing effects of uncertainty.

Meanwhile, it’s quite possible that the current trade impasse with China will continue or even escalate.

The Asia-Pacific Economic Cooperation summit held earlier this month ended with the leaders failing to produce a joint statement amid U.S.-China trade tensions. Some clarity may emerge from President Trump’s meetings with Chinese President Xi Jinping at the G20 summit in Argentina later this week.

But the president has made it very clear that he will only agree to a deal that puts America back in the driver’s seat on global trade. If these meetings don’t go well, we will likely see another round of tariffs on Chinese imports, perhaps as high as 25 percent on $200 billion worth of goods starting in 2019.

Many have speculated that even Democrats will support and encourage the president’s tough stance on Beijing. Yet I submit that heightened trade rhetoric is in no one’s best interest, particularly in the wake of a slowdown in business spending as recently noted by the Federal Reserve.

The U.S. economy continues to hum along, but there are warning signs of potential tough times ahead, and a prolonged trade war, backed by both parties, can only exacerbate such conditions.

I encourage lawmakers on both sides of the aisle to find common ground and work with the administration to find another way – one that doesn’t drive down profits for major drivers of our domestic economy.

None of these outcomes is set in stone and some even seem improbable. But as the dynamic in Washington changes, responsible business leaders – who are fiduciaries to both their retail and institutional investors – will not be able to stand by with their fingers crossed, hoping it all works out.

Instead, they should take proactive measures to mitigate the risk now.  Companies should begin developing contingency plans including relocating production facilities; postponing or adjusting hiring, construction and investment plans; and considering alternative markets.

Take auto manufacturers and parts suppliers as an example of an industry facing substantial impact as the debate over USCMA unfolds. Companies in this industry should be thinking now about potential supply chain disruptions in the coming year, and starting to identify potential secondary suppliers that would allow them to continue production and distribution at a reasonable cost.

Meanwhile, firms that have incorporated Chinese market access into their growth strategies should be anticipating that this access, or its economic appeal, is likely to be curtailed in the near future by rising tariffs on both sides. CEOs and CFOs should be thinking about how this changing global landscape may impact their companies' valuation and financing strategies, and preparing accordingly.

These scenarios will inevitably differ for U.S. companies based on industry, size and global reach. But with the shifting political landscape, these are important considerations for all businesses.

Ultimately, the only thing we can reasonably expect when it comes to trade policy is more uncertainty. Choosing not to think about and plan for the uncertainty is a luxury no business can afford – and one that shareholders should not allow.

Chris Campbell is a former assistant secretary of the U.S. Treasury and chief strategist of Duff & Phelps, a global consulting firm.

Trump has just revolutionized global trade by replacing NAFTA with USMCA

Trump administration negotiators reached a major agreement with Canada on trade over the weekend.  The breakthrough, which came on the heels of an earlier deal with Mexico, vindicates President Trump’s tough approach to reforming trade and will mark a fundamental turning point for American jobs and global power.

The new U.S.-Mexico-Canada Agreement (USMCA), which replaces the North American Free Trade Agreement (NAFTA), is much more than just a new name.

Some of its breakthroughs include:

Aiding farmers by curbing Canada’s high tariffs and low quotas on U.S. dairy products.Reinvigorating U.S. car manufacturing.  Previously 40 percent of a car could be made in China or other places with few labor or environmental standards and still considered to be “North American” and imported cheaply into the USA.  The agreement drops this foreign portion to 25 percent.Easing the burden on sick Americans who fund drug development by paying full price for patented drugs.  Both Canada and Mexico have agreed to respect drug patents on biologic drugs—the most promising field of new cures—for a period of 10 years, which means Americans won’t be only ones from whom drug companies can recover expenses. 

NAFTA was the most hated trade agreement in U.S. history.  A poll earlier this year showed a plurality of Americans wanted to leave the agreement and only one in three thought it was beneficial.  That’s why self-described “free traders” who have whined incessantly about Trump’s use of tariffs and other aggressive tactics should praise him.  Trump has taken a pact that facilitated crony trade and replaced it with one that is durable and preserves liberalized trade in North America.  It also serves as a new standard for trade agreements with other counties, especially its provisions to protect U.S. digital services and intellectual property—a big part of the future economy.

We pay for Europe’s defense and it rewards us with a 10 percent tariff on U.S. cars (compared to our 2.5 percent tariff) and impenetrable barriers to U.S. agriculture, especially by France. 

The new deal also shows that Trump will put aside political differences when it comes to protecting American jobs and profitability.  The National Football League (NFL), which Trump has criticized repeatedly for its players’ appalling displays of disrespect to the American flag, won big.  The new agreement ends a practice by which Canada made NFL broadcasters show the same commercials in Canada that it did in the USA, precluding a major source of advertising revenue for the league.

USMCA also ends the practice in the Canadian province of British Columbia of elevating the price of American wine imports, which will particularly help hyper-liberal wine-growing northern California.  When it comes to defending American interests, Trump is the president of all America, not just his political supporters.

There are still other big trade fights on the horizon.  The Trump administration is also seeking major changes to trade relationships with China, the European Union (E.U.), and Japan.  This new North American deal comes on the heels of agreements with South Korea.

To paraphrase Winston Churchill, this isn’t the beginning of the end, but it may be the end of the beginning of creating a new world order of trade.

Trade talks with Japan, with which the U.S. has a long-running trade deficit, recently were transformed from unserious to serious.  Japanese Prime Minister Shinzo Abe just agreed to a formal process that should lead to an agreement.

China will be much tougher, especially since it benefits from a massive $376 billion trade in goods deficit.  The communist government there has built an economy that depends on stealing intellectual property from America and other advanced economies.  It also manipulates its currency and has high tariffs, including one that is ten times the U.S. rate on autos.  It will likely take years of sustained pressure on China to change, but in the meantime we can bias trade and investment away from China.

Europe too is dragging its feet on trade reform, despite signaling a willingness to agree to fundamental reform.  We pay for Europe’s defense and it rewards us with a 10 percent tariff on U.S. cars (compared to our 2.5 percent tariff) and impenetrable barriers to U.S. agriculture, especially by France.

Trump has threatened higher tariffs on cars and auto parts to force negotiations.  One of the innovations of the USMCA is that it exempts Canadian and Mexican companies from future tariffs like these up to certain levels.  That now leaves the Trump administration with the ability to levy car tariffs without directly affecting the North American auto industry.

Don’t expect Wall Street or the “free trade” experts in Washington to give Trump credit for this breakthrough or accept his tough tactics, including the tariffs.  But by the end of Trump’s first term, Americans will see a sustained booming economy that benefits all of North America and the other advanced economies that are willing to play fair with us.

Christian Whiton was a senior advisor in the Donald Trump and George W. Bush administrations.  He is a senior fellow for strategy and public diplomacy at the Center for the National Interest and the author of “Smart Power: Between Diplomacy and War.”

Arvin Patel: America’s national treasure is at stake in the trade war with China

Many Washington D.C. pundits are wondering what positive outcomes could emerge from President Trump’s full-scale Chinese trade war. After all, economists from virtually all political backgrounds seem to agree that tariffs are harmful to world trade and to the consumers in the country they are meant to protect. But there is an explanation for the extraordinary actions President Trump is taking. 

What’s at stake in this trade dispute is America’s national treasure: our intellectual property. Our ideas are the embodiment of our great creativity and innovation, and of our unique system that makes them possible. A technology competition between the United States and China is being waged, and the outcome will determine the global balance of economic and military power for the foreseeable future.

Consider the following: American inventors hold more of the world’s patents than any other country.  As a result, the U.S. has a trade surplus in “charges for the use of intellectual property” of nearly $80 billion per year – nearly four times the surplus of the next closest country, Japan, and nearly twice as much as all other countries that have a surplus combined.

Although the trade imbalance gets the headlines, it’s the defense of our technological advantage that is at stake in the dispute with China.

The Trump administration estimates that the dollar amount of American intellectual property stolen by China is about $600 billion, and believes that this theft has already resulted in the loss of tens of millions of jobs.

Prior administrations were aware of the problem but were unwilling to take on China’s unfair trade practices. Whatever you think about our President, it’s long past time we had an administration that defends our national treasure.

The Chinese government has used a wide variety of techniques to obtain access to America’s technology. Beyond the many documented cases of copying, reverse engineering, computer hacking and corporate espionage, one of the most egregious violations of trading norms is China’s investment requirements.

Western companies that seek to do business in China are required to form a joint venture (JV) with a Chinese partner. JVs give Chinese companies direct access to the technology that these companies deploy in China.

Many Western companies have made the difficult decision to submit to the JV requirements so that they can access low-cost Chinese labor and pursue the Chinese consumer market. In many cases however, this has been a bad tradeoff as companies end up facing a variety of barriers, including competition from upstart Chinese companies that are selling identical, or nearly identical, copies of their products with slightly altered branding.

More recently, China has issued cybersecurity policies that require Western companies to submit their software code and technical documentation for inspection by the government. The stated purpose of these inspections is to ensure that there is nothing nefarious embedded in the software that would create a national security concern. But American companies fear that their software will be copied and transferred to their Chinese competitors.

It is important to understand that these actions taken by the Chinese government are not accidental. They are part of a plan to acquire Western technology. The Chinese government has long understood the central role that intellectual property plays in the global balance of power. Former Chinese Premier Wen Jiabao stated on many occasions that “the future world competition will be for intellectual property rights,” and they have been aggressively engaging in that competition.

China has every right, and in fact a responsibility, to make China great, just as the United States must work to make America great.  The problem isn’t China’s aspirations or its efforts to raise its standard of living and technical capabilities.  The problem is that many of its actions are in direct violation of international trading rules, while others violate norms of reciprocity.

Trade can only be free if it is fair.  If countries are going to have free and open trade, then all parties must adhere to the same rules.  America cannot trade freely with any country that doesn’t trade fairly.

For my part, I do not fear a fair competition with China because despite China’s economic success in certain sectors like infrastructure, their system is not built to go toe-to-toe with America in more innovative and entrepreneurial pursuits.

“Planned innovation” is an oxymoron. In the West, we’ve learned that whenever government intervenes in the innovation economy by picking winners and allocating resources, the outcomes are almost universally terrible.

Innovation by its very nature is an act of defiance. Innovators take on the established incumbents and undercut the existing order of the marketplace. America’s innovation ecosystem is built on risk-taking behavior and the promise of rich rewards for those who succeed in providing a more desirable alternative to what already exists.

China’s trade practices, if left unchecked, may enable them to rapidly catch up with the West, but they do not guarantee their ability to compete in a world where innovation is the critical ingredient.  Innovation requires freedom, and in China, that is still in short supply.

If the Trump administration’s trade war ends with tariffs and a fight over the balance of trade, it will almost certainly cost more than it’s worth. But, if tariffs are used as a lever to even the playing field so that America can participate in a fair competition, the temporary pain will have been well worth the sacrifice.

America’s national treasure is worth fighting to protect. Let’s set a level playing field, and then bring on the technology competition.

Arvin Patel is the chief intellectual property officer at TiVo, where he is responsible for the company’s industry-leading portfolio of approximately 5,500 issued and pending patents.