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What Is The Trump Administration's Strategy For Trade Battles?


President Trump made two announcements about trade yesterday. In the morning, the president tweeted that he would reimpose tariffs on steel and aluminum imports from Brazil and Argentina immediately, and then later, the U.S. said it might put tariffs of up to 100% on French goods, including champagne, handbags and cheese. The U.S. says it's responding to a French tax on U.S. tech companies. The French trade minister this morning called the U.S. threat unacceptable and insisted that France is not changing that tax. And then here was President Trump this morning talking about this in London.


PRESIDENT DONALD TRUMP: I don't want France taxing American companies. If they're going to be taxed, it's going to be - the United States will tax them.

KING: Stephen Vaughn is former general counsel of the U.S. Trade Representative in the Trump administration, and we asked him in to talk about the administration's strategy. Mr. Vaughn, thanks for coming in.

STEPHEN VAUGHN: Thanks for having me.

KING: OK, let's talk about the French tariffs since that's the most recent news. You know, the French government says big tech and data are not taxed fairly; that's what they're trying to do here. What would the impact be on U.S. companies, this tax?

VAUGHN: Well, I think one of the things that the Americans are concerned about is that this is money that should probably be going to the United States or could be affecting the U.S. tax base. And it's been very clear that what France intends to do is to hit American companies. They say it's an across-the-board tax, but it's going to disproportionately affect U.S. companies, and that'll put U.S. companies at a disadvantage vis-a-vis, you know, other companies - and will be treating them unfairly. So that's what the Americans are concerned about. That's what the investigation is about. And they regard this as an unfair trading practice.

KING: OK, so President Trump is essentially saying, France has forced our hand with this tax; we don't really have any options. Do you think this will come into play as he sits down with France's President Emmanuel Macron today at the NATO summit in London?

VAUGHN: Well, I certainly think it would be a wise idea for France to negotiate with the president on this issue. I mean, the president is very concerned about it. It is a major problem. We have had a tense history with European regulators and U.S. tech companies in recent years. And I think the U.S. government is increasingly concerned that our companies aren't being treated fairly.

KING: OK, the president also tweeted yesterday that he's restoring steel tariffs on Brazil and Argentina, which came as a surprise because those companies had worked out an exemption with the United States. What happened?

VAUGHN: I think the president is concerned that - the purpose of the 232 steel tariffs is to make sure that we have a strong steel industry, we have a strong aluminum industry. The president regards those as a national security issue. So I think he's now concerned that certain actions that are taking place in Brazil and Argentina on the currency side, as he indicated, are going to lead to further imports of steel from Brazil and Argentina, which could put our own steel producers and aluminum producers at risk.

KING: Although, he tweeted that he wanted to protect American farmers.

VAUGHN: Now, I think that what he said was that Brazil and Argentina have a - have currency policies which are hurting our farmers, but it's also logical that those same policies could lead to increased imports of steel and aluminum from those countries as well. And I think that's what he's concerned about.

KING: Tariffs obviously are a big tool for this administration. They are, as we also know, essentially a tax that are paid by U.S. consumers and businesses. We often on our programs talk to nervous farmers and nervous manufacturers. We know that manufacturing has contracted. Can the administration consider other options that don't have such a direct impact on Americans?

VAUGHN: Well, first, let's put some statistics on this. U.S. exports are higher now than they were two or three years ago. U.S. imports are higher than they were two or three years ago. U.S. farm exports are about where they were last year. So up to this point, U.S. trade has continued very, very strongly.

KING: Sure, but I do need to note that individual farmers, individual manufacturers tell us all the time this makes them very nervous; they are getting hit hard. I know we're talking about the difference between the macro picture and the micro picture and - but it seems worth noting that, right?

VAUGHN: Well, I don't think anybody can come up with a trade policy that's going to make literally every single person - you know, affect every single person the same. There were a lot of workers who were hurt by the old trade policy when they saw jobs offshored and they saw manufacturing jobs shut down. So you have to - to me, you have to look at it from the macroeconomic picture - record-low unemployment, very - almost no inflation, strong markets and, generally, strong trade numbers. So I think the policies are working very well, and I think that's why the president is continuing to go down that path.

The issue of tariffs - I mean, the president wants to make deals. He made a deal with Japan. He made deal with Mexico. He made a deal with Canada. He made a deal with Korea. He's - he wants to talk to the U.K. He - he's in talks with China. He's in talks with India. He's happy to negotiate, and he wants to negotiate. Sometimes people don't want to come to the negotiating table, and then you have to figure out how you get more leverage.

KING: Let me ask you a last question. More tariffs on Chinese goods go into effect on December 15 - things like smartphones and laptops, things that U.S. consumers love. As we said, consumers are already feeling the hurt. Do you think they should prepare for more?

VAUGHN: I think it'll all depend on China and how they want to respond to the situation and the extent to which they're ready to sit down and work through some of these issues that the president's been talking about. He's been very clear - he wants a deal if the deal will be good for the United States. And he's made lots of deals with other trading partners. So that's what we're looking for, and I think it's really up to the other countries to decide how they want to work with us.

KING: Stephen Vaughn is former general counsel of the Office of the U.S. Trade Representative. Mr. Vaughn, thank you so much for coming in.

VAUGHN: Thank you for having me. Transcript provided by NPR, Copyright NPR.

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