The NPR Politics Podcast - Trade Deals Offer Trump Fodder To Tout On Trail

Episode Date: January 16, 2020

This week, President Trump inked deals in the two trade spats that have helped to define presidency: The US-Mexico-Canada Agreement, an incremental upgrade of NAFTA; and, a so-called 'Phase One' deal to deescalate his trade war with China.It remains to be seen what, if any, impact the bilateral deals have on the U.S. economy, but it seems certain that the president will tout the agreements on the campaign trail—particularly in states with large agricultural and manufacturing sectors.This episode: White House correspondent Tamara Keith, Chief Economics Correspondent Scott Horsley, and National Political Correspondent Mara Liasson.Connect:Subscribe to the NPR Politics Podcast here.Email the show at [e-mail] the NPR Politics Podcast Facebook Group.Subscribe to the NPR Politics Newsletter.Find and support your local public radio station.Learn more about sponsor message choices: podcastchoices.com/adchoicesNPR Privacy Policy

Hi, this is Brendan snowshoeing under the full wolf moon in Black Canyon of the Gunnison National Park, one of Colorado's four national parks. This podcast was recorded at 2.41 p.m. on Thursday, the 16th of January. Things may have changed by the time you hear it. All right, here's the show. The sound. That's a very cool time span. Hey there, it's the show. The sound. That's a very cool time stamp. Hey there, it's the NPR Politics Podcast. I'm Tamara Keith. I cover the White House.

I'm Mara Liason, national political correspondent. And we have a special guest here. Woo-hoo! Scott Horsley. Back from the Black Canyon of the Gunnison in my home state of Colorado, where I've been hiding out, lo, these many months, but here to talk about trade. Yes, Scott, you are the chief economics correspondent for NPR. Before we get to trade, this was really a split screen day in the U.S. Senate. There was a big trade development, but there was also the beginning of the process, sort of the ceremonial start of impeachment in the Senate.

Hear ye, hear ye, hear ye. All persons are commanded to keep silent on pain of imprisonment. While the House of Representatives is exhibiting to the Senate of the United States articles of impeachment against Donald John Trump, President of the United States. You had the House managers reading the articles of impeachment into the record. Using the powers of his high office, President Trump solicited the interference of a foreign government, Ukraine, in the 2020 United States presidential election. You had the Chief Justice of the United States escorted into the Senate chamber and sworn in. Will you place your left hand on the Bible and raise your right hand?

And then the Chief Justice, John Roberts, turns around and swears in the senators. Do you solemnly swear that in all things appertaining to the trial of the impeachment of Donald John Trump, President of the United States, now pending, You will do impartial justice according to the Constitution and laws. So help you God. Now, the trial will actually start on Tuesday. This really big vote that the Senate took, an overwhelmingly bipartisan vote to pass the USMCA, NAFTA 2.0, whatever you want to call it. This big trade deal that'll be a centerpiece of President Trump's presidential reelection campaign. The yeas are 89. The nays are 10. The bill is passed. Scott, what is the USMCA other than like YMCA, USMCA?

This is a catchy tune. This is an updated version of the North American Free Trade Agreement between the US, Canada, and Mexico. It addresses things like digital commerce that didn't exist back in a quarter century ago when NAFTA was initially signed. It will also make some changes in the automotive industry where car makers will have to use more North American content now if they want to sell cars and trucks here duty-free. And at the insistence of House Democrats, it includes some stronger labor and environmental protections. The one fact that it's kind of all you need to

know is the AFL-CIO endorsed this. This was a pact that was made friendlier to labor, friendlier to House Democrats. And the president, because he is at heart a reality TV producer, kind of set up the storyline to be NAFTA horrible, NAFTA 2.0 better than anything you could imagine. But in fact, it's a modest tweaking, updating, modernizing of NAFTA. It had big bipartisan support. And the other factoid that I think you need to know is that one Republican, only one Republican in the Senate voted against it, Pat Toomey of Pennsylvania, and he represents the old GOP that Trump has vanquished, the old Republican Party that cared about free trade and big deficits. And this is less of a free trade agreement, has more protectionist elements, and he wouldn't vote

for it. But this really shows you that this truly was a bipartisan compromise. Donald Trump was willing to satisfy Nancy Pelosi in the House and Democrats to get this passed. But you're absolutely right. FT, which is in NAFTA Democrats to get this passed. But you're absolutely right. You know, FT, which is in NAFTA, stands for free trade. There's no FT in USMCA. This is a more protectionist measure than NAFTA was, although on the whole, it's pretty much just NAFTA with a fresh coat of paint. Right. And guess what? This is not the only trade deal news this week alone. President Trump signed an agreement, a phase one partial agreement with China, a trade agreement with China. In essence, pulling back from another doomsday scenario, which was this rapidly escalating trade war that he had set up with China.

That's right. Although he didn't pull all the way back. This is a more of a cease fire than an armistice with China. He's not going to ratchet up tariffs any further. But most of the tariffs that were already in place that were put in place over the last 18 months during this trade war are staying in place. So it's it's it's not a doomsday scenario, but it's not a complete trade piece either. This new phase one agreement. Let's just do a rewind about the last 18 months. I mean, clearly, President Trump ran on the idea that China was not a good actor when it comes to trade. And then he came into office. And then over the past 18 months, he's been imposing more and more tariffs on China, designating it a currency manipulator, all of these different things, in theory, to force these negotiations, which have now taken place.

That's right. And it remains to be seen really how much the White House has gotten in return for this phase one agreement. When the trade war began, the White House said they were really concerned about the theft of intellectual property from American companies and China's requiring U.S. companies to share their technological know-how as a cost of doing business in China. This agreement does include provisions to stop both of those practices, but China's made promises like that in the past, so there's some skepticism whether they're actually going to follow through this time. Time will tell. The other component that was sort of added, because Trump is always concerned about the trade deficit, is a mandate that China buy a whole lot more stuff from the United States, farm goods,

factory products, oil, natural gas, services. All told, the deal calls for China to buy $200 billion more from the U.S. over the next couple of years than it was buying before this trade war began. That would be huge if it actually happened. That would require them to buy more than 50% more than they were already buying. Have they publicly committed to that? China's been a little... Cagey? A little cagey on that.

The vice premier at the signing ceremony on Wednesday said China's purchases will be driven by market demand. Ooh, that doesn't sound like an ironclad commitment. You know, what's really interesting about this is there was a big bipartisan consensus that China was a cheater. China needed to be dealt with. Someone needed to take them on. The president was right to call China out. But the controversy where there's not a consensus is whether the methods that he used, a tariff war, and he said, I'm a tariff man. He really believes in them. Did they get him anything?

All right, let's take a quick break. And when we come back, what might phase two look like? I'm Peter Sagal. I hope you're enjoying this very serious NPR podcast that provides important information presented in a respectful way. When you get tired of that, try Wait, Wait, Don't Tell Me, the NPR show so unlike NPR we're kind of amazed it's on NPR. Wait, Wait, Don't Tell Me from NPR. Listen now.

It seems like you really like podcasts, but have you ever thought about making one? Okay, so we have a guide for you, especially if you're a kid in school and want to make a podcast of your own. Check out the new podcast from NPR's Student Podcast Challenge. Listen and share with your friends. All right, we are back. President Trump has signed phase one of a trade agreement with China. But it seems like maybe they left a lot of the big stuff for

phase two, which depending on which day President Trump is talking, either they're going to begin negotiating on immediately or they may begin negotiating on after the election. Robert Lighthizer, the president's trade representative, told reporters this week that they're certainly not going to begin negotiating phase two immediately. For one thing, they want to take some time and see how phase one is working. You know, if phase one is collapsing of its own weight, then there's not much point in negotiating a phase two. On the other hand, if China seems to be delivering on its commitments, that might build confidence and set the table for a phase two negotiation. So it's not going to be right away. In any case, it may or may not happen before the

November election. So what's on the to-do list for phase two? The big issue, as Mara addressed earlier, is the subsidies that China provides for its state-owned companies. Subsidies which the U.S. believes gives those companies an unfair advantage in global markets and sort of distorts trading patterns. This was at the heart of the steel and aluminum tariffs, the big oversupply of steel from subsidized companies in China, for example. So they're asking China to change their business model. That is a huge ask. What is the incentive for China to do that? And really, you know, since our economy, we believe that free markets are a better way of allocating capital. We should have an advantage if our

system really is better. Those subsidies shouldn't be giving China as a whole an advantage. So it's a little bit odd that we're really asking them to reinvent their whole economic system when we insist our economic system is superior. But that is the heavy lift that would come in phase two. Right. And the question I have is how interested is Donald Trump in phase two? I mean, he generally likes to start a fight that he can eventually say that he won in whatever fashion he has to do that. He cares about the trade deficit as a metric. He's the only person who seems to care about it in that way. So the question is, how much does he care about these big structural issues if he got something that he can say was a big win and that

China is going to buy more soybeans? You're right. And there's probably not a whole lot of incentive, at least before the November election, for him to go out on a tightrope and say, we're now in the midst of phase two negotiations. He'll pocket the phase one win campaign on it, and then we'll see what happens after November. This being the NPR Politics Podcast, I think we should end on politics instead of policy. Here you have a bipartisan vote for the USMCA trade deal, giving President Trump something that he can tout in his reelection. And the reality is that of the Democrats still running for president, only one of them voted against it, Bernie Sanders. That's right. This was a bipartisan achievement. In the House, all those Democrats, moderate

Democrats who'd flipped red districts to blue, they voted for this too. Nancy Pelosi made sure it came up for a vote so her moderates, who are the frontline Democrats, the ones that keep her majority, could have a chance to vote yes on this. And say, we aren't doing nothing. We did something. Yes. So it's a win-win in that sense. Donald Trump generally likes things that are not necessarily bipartisan. So he can say, we won and the Democrats were on the wrong side of this. But the other question I have about the political impact of this, other than the bragging rights that he got it done, is will the new USMCA and the phase one China trade deal boost the economy in 2020 enough so people will feel it?

In other words, the tax cuts did that temporarily for him, but we don't know. Actually, no. I mean, most people don't think they got a tax cut. Well, it boosted the economy by some small amount. Oh, boosted the economy, but yeah, yeah, yeah. Public opinion versus actual economic activity are completely different things. Scott, the economy is like turning an aircraft carrier. This thing doesn't happen that quickly. How soon could we see these trade deals affecting the economy, if ever? I don't think these two trade deals are ever going to have a really profound or significant impact on the direction of the U.S. economy, which has generally been to decelerate over the last year or so, partly as a result of the

president's trade war. But that doesn't matter when it comes to campaign trail, because regardless of what's going on in the economy, you're going to hear this president talking about the booming stock market, talking about wages, talking about unemployment at a 50-year low. Almost no matter what's happening with the economy, you're going to hear him sell it as the greatest economy the world has ever seen. And these two wins for him, USMCA and China Phase One, make it just a little bit harder for Democrats to talk about how the economy really isn't good. That's always a really difficult position for the opposition party to be in, to convince people that things are bad. That is where we're going to end it today. We will be back in your feeds tomorrow with our weekly roundup.

I'm Tamara Keith. I cover the White House. I'm Scott Horsley. I cover economics. And I'm Mar Keith. I cover the White House. I'm Scott Horsley. I cover economics. And I'm Mara Liason, national political correspondent. And thank you for listening to the NPR Politics Podcast.