With the Trump Administration last week threatening new, 25-percent tariffs on car imports from Mexico and simultaneously trying to finalize a trade deal with China, former U.S. Trade Representative Michael Froman offered his broad analysis of current key issues to attendees at the Footwear Executive Summit in Washington, D.C. last week. The Footwear Distributors and Retailers of America (FDRA) hosts the annual event.
Froman, a former Citigroup senior executive who served as the U.S. Trade Representative from 2013-2017 under President Obama, was balanced in his commentary, offering both criticism and praise of trade actions being taken by the Trump Administration under current USTR Robert Lighthizer. He praised the current collective, national debate on trade.
“A number of issues that the administration is going after with China are quite legitimate and longstanding concerns of the business community,” remarked Froman, currently serving as Vice Chairman and president of strategic growth for Mastercard. “But they are going at it a different way than we did.”
While Froman’s U.S. trade team “dangled a bi-lateral investment treaty” in front of China as an incentive to address certain structural trade issues and took the country before the World Trade Organization 16 times for alleged violations, the Trump trade team has focused on imposing tariffs on $250 billion worth of Chinese imports and threatened to levy more.
“It certainly has gotten the attention of the Chinese leadership. And it is very eager to reach an accommodation with the U.S.,” remarked Froman, pointing out that there are two channels of trade negotiations between the countries—a “shopping list” approach focused on China committing to purchase certain amounts of U.S.-produced goods and a second track “focused on structural issues.”
“To the administration’s credit, it doesn’t seem to be satisfied with only the shopping list approach,” commented Froman, who oversaw the drafting of the Trans-Pacific Partnership trade pact under Obama. The U.S. withdrew from TPP, agreed upon by 11 countries, under Trump.
While calling that TPP withdrawal “a most significant blunder” that he hopes the U.S. will re-engage with over some time, Froman said the yet-to-be-ratified USMCA (U.S.-Mexico-Canada) trade agreement is positive given NAFTA (North American Free Trade Agreement) needed to be updated. But he did outline, “good, bad and ugly” components of the pending deal, including uncertainty around sunset provisions (bad) and rules of origin (ugly) that “make take years to understand whether it creates more or less business in the United States.”
Admitting there is more consensus today about being demanding on trade with China, Froman warned, “You can be tough on trade, but you must be smart about it.” He also opined, “Tariffs are very easy to put on, very hard to take off.”