Trade Policy Update:

A View from the Business

Community
John Murphy
Senior Vice President for International Policy
U.S. Chamber of Commerce
 I: Where is Trade Headed?
II: Where is U.S. Trade Policy Headed?
III: The World Won’t Stand Still

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Where Is Trade
Headed?

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“Commerce Invades Every Zone”
Growth in trade as a share of global GDP

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“Commerce Invades Every Zone”
Multilateral trade liberalization: 1947

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“Commerce Invades Every Zone”
Containerization: Malcolm McLean, 1956

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“Commerce Invades Every Zone”
World Wide Web: 1989

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Have We Reached
“Peak Trade”?

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Peak Trade? Growth Stalls

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Peak Trade? Growth Stalls

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Peak Trade? Protectionism Spreads

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Peak Trade? Foreign Corp. Earnings

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Where is U.S. Trade Policy
Headed?
The Business View

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The Opportunity of Trade

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 The Challenge of Trade
 U.S. market largely open to imports, but tariffs in
developing countries are much higher
 It’s like going into a basketball game down by a
dozen points from the tip-off

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 Others Moving Ahead
No. of FTA Partner Countries
70
60 58
60
50
50
40
30
20
20
10
0
Chile European Union Mexico United States
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Where is U.S. Trade Policy
Headed?
The White House View

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 “Man
Controlling
Trade”

—in front of the

FTC in
Washington, D.C.

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 How Can We Tame Trade?
“Trying to pull up a drawbridge on trade would
only hurt us and hurt our workers. So the
answer is to make sure that globalization and
trade is working for us, not against us… This is
an opportunity to grow our economies and write
the rules for trade in the 21st century in a way
that's equitable.”
—President Barack Obama
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 How Can We Tame Trade?
“With tough and fair agreements, international
trade can be used to grow our economy, return
millions of jobs to America’s shores, and
revitalize our nation's suffering communities.”

—President Donald Trump

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Manufacturing Concerns

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 Manufacturing Opportunity

Source:
NAM 29
Trump Administration Views on Trade
Sovereignty
“We shouldn’t be tying ourselves down like
Gulliver in the land of Lilliputians with so many
strings a guy can’t move. That is where we are
heading, and it’s not necessary.”
— Jeff Sessions, 2016
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Trump Administration Views on Trade
Global Supply Chains
“It does the American economy no long-term
good to only keep the big box factories where we
are now assembling ‘American’ products that are
composed primarily of foreign components.”
— Peter Navarro, 2017
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 Trump Administration Views on Trade
A Zero-Sum Game, or: “I Win, You Lose”
“The U.S. is trying to do a difficult thing [in
NAFTA]. We’re asking two countries to give up
some privileges that they have enjoyed for 22
years, and we’re not in a position to offer anything
in return. So that’s a tough sell.”
— Wilbur Ross, 2018
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Trump Administration Views on Trade
The Trade Balance
“Trade deficits hurt the economy very badly.”
— Donald Trump, 2017

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 NAFTA
Modernization

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 The Facts on NAFTA
 JOBS: 14 million American jobs depend on trade
with Canada and Mexico
 MANUFACTURING: Canada and Mexico buy more
U.S.-made manufactured goods than our next 10
largest markets combined
 AGRICULTURE: A bonanza for American farmers
and ranchers, with exports quadrupling
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NAFTA Modernization Priorities
Examples
 Digital Commerce
 Intellectual Property
 Dairy access

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 NAFTA Poison Pills
 Enforcement
 Sunset Clause
 Auto Rules of Origin
 Government Procurement
Uncertainty, higher costs,
forcing jobs and production offshore
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 NAFTA Pushback
 Senators
 Governors
 Agriculture and Business
“NAFTA has never been so
popular on Capitol Hill”

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Sec. 232 Tariffs on Steel and Aluminum

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Sec. 232 Tariffs on Steel and Aluminum
 25% on steel, 10% on aluminum
 Quotas: Korea, Brazil, Argentina; Australia the exception
 Steel prices up ~45% since 1/1/18;
now 50% higher than in Europe
 Aluminum prices volatile, up 130% since 1/1/18
 Foreign retaliation on $40 billion of U.S. exports

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 “The Estimated Impacts of Tariffs
on Steel and Aluminum”
Job gains for steel/aluminum producers +26,346
Net job losses elsewhere -495,136
Ratio of job losses/jobs gained 18:1

—The Trade Partnership, March 2018

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 Product Exclusions (Commerce)
 27,000 petitions: 700 processed to date
 Hatch and Wyden: Process lacks “due process
and procedural fairness” for stakeholders
 Petitioners must provide 70 attributes of
metal product
 Unclear how to protect proprietary information
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Sec. 232 Tariffs on Autos, Auto Parts

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Sec. 232 Tariffs on Autos, Auto Parts
 20%-25% tariff proposed: September?
 $350 billion in imports affected; commensurate
retaliation to be expected
 99% of comments opposed: No industry support

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 Tariffs on Chinese Imports
 Broad agreement on diagnosis: Concerns about
China’s forced tech transfer policies and IP theft
 Broad opposition on remedy: Tariffs on $50 billion
in imports from China — or $250 billion?
25% tariff on $34 billion of imports on 7/6
Another $16 billion on ~8/1
$200 billion on ~9/1?
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 Tariffs on Chinese Imports
 Which is the U.S. goal?
 Reduction in bilateral trade deficit?
 Policy changes?
 First wave of harm: Industry, consumers
 Second wave: Retaliation fears

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 Conclusion:
The World Won’t Stand Still

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The World is Moving Forward

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Americans Warming to Trade?

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 What is the Chamber Doing?
 Information: www.TheWrongApproach.com
 Grassroots: State and local chambers
 Advocacy: Outreach to Administration, Congress,
Governors

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 Trade Policy Update:
A View from the Business
Community
John Murphy
Senior Vice President for International Policy
U.S. Chamber of Commerce
jmurphy@uschamber.com