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Deadline Looms For U.S. To Decide Whether Allies Face Tariffs

STEVE INSKEEP, HOST:

Just to review - the trade war with China didn't last very long. David Wessel, a regular analyst on this program, wrote that the Trump administration made big demands of China and, quote, "got rejected and folded." China made general promises. The trade war was put on hold. President Trump instead asked for a Chinese firm to get U.S. sanctions relief. And by coincidence or not, his daughter Ivanka was awarded seven new trademarks for products in China.

That was the latest round with America's greatest economic rival. Now we await the next round with U.S. allies. The United States is supposed to decide soon whether to go through with President Trump's steel and aluminum tariffs on Canada, Mexico and the European Union.

Georgetown Law professor Michael Gadbaw is watching all this. He's a former General Electric executive and U.S. trade lawyer. Welcome to the program.

MICHAEL GADBAW: Thank you, Steve.

INSKEEP: Do you see a clear strategy from the Trump administration on how to approach U.S. allies when it comes to trade?

GADBAW: Well, the administration seems to be divided between the hardliners who think China should never have been allowed in the WTO in the first place and those who think war with China is not desirable and not inevitable if we can trade and engage them to solve our mutual problems. So the allies are basically trying to figure out what part of the administration is on top at any given moment.

INSKEEP: OK. So you're talking about China there. And there were some clear divisions in the administration about how to approach China, and ultimately the administration backed off for the moment. But then there's the question of trade directly with U.S. allies - with the European Union, with Canada, with Mexico - these threatened steel and aluminum tariffs. Do you see a strategy there on the part of the administration?

GADBAW: Well, there, the administration has stepped into a situation where we have global overcapacity in steel. And it's not unprecedented for either Republican or Democratic administrations to take unilateral actions in those sorts of circumstances. And so now we've got - most countries we've had negotiated deals. You've got deals with Brazil; you've got Argentina; Korea stepped up; Australia - they all negotiated something that involves some degree of voluntary restraints. The EU has said they're not prepared to negotiate that kind of deal, and they're threatening to kind of retaliate, and it's looking very serious.

INSKEEP: OK. So you're saying that this effort by the United States to deal with too much steel being produced around the world is not unprecedented on the part of the Trump administration. But because the Europeans don't want to go along with restrictions - well, when you say very serious, what's the worst-case scenario here?

GADBAW: Well, the worst case is that they take retaliation and then the case gets bumped into the WTO to try to figure out who's right and who's wrong.

INSKEEP: The World Trade Organization. Do you think the United States would have a case there?

GADBAW: Well, the United States basically has said this is national security. And the WTO language is pretty clear that on issues of national security, it's up to each member to decide. There are those that argue that this, if it went to an adjudication, would come out against the United States, those who argue that it could never get that far. I tend to think that on matters of national security, it's hard to imagine the World Trade Organization stepping up and telling a member what its national security policy really should be.

INSKEEP: Wow, OK. So these tariffs on the Europeans, if they go into effect, they really could be upheld and be in effect and be a part of the trade landscape.

Let me ask you about one other thing before I let you go. We mentioned at the beginning that even as the Trump administration was trying to get a deal out of China and walking away in some ways disappointed, the president's daughter was not disappointed at all. Ivanka Trump got seven new trademarks approved in China. Do you sense a connection between one thing and the other?

GADBAW: Yeah, it looks like there may very well be. And the intervention of the ZTE case, which is essentially a compliance case, has got trouble spray-painted all over it. So I think this could be one of the most controversial things he's done.

INSKEEP: And even if there's not a direct connection, I suppose they're both happening at the same time, which raises questions.

Michael Gadbaw, thanks very much. Really appreciate it.

GADBAW: Thank you.

INSKEEP: He's a Georgetown University law professor, former attorney for the Office of the U.S. Trade Representative. Transcript provided by NPR, Copyright NPR.