The NPR Politics Podcast - Trump Leaves G-20 With China Trade Truce, Plans To Cancel NAFTA Ahead Of New Pact

Episode Date: December 3, 2018

President Trump left the Group of 20 summit with an agreement not to raise tariffs on Chinese goods in the next 90 days. The deal amounts to a cease-fire in the series of escalating, tit-for-tat tariffs the U.S. and China have imposed on each other's goods throughout the year. And President Trump signed a new trade deal with Canada and Mexico. This episode: political reporter Asma Khalid, White House correspondent Tamara Keith, and White House correspondent Scott Horsley. Email the show at [e-mail]. Find and support your local public radio station at npr.org/stations.Learn more about sponsor message choices: podcastchoices.com/adchoicesNPR Privacy Policy

Hey, Tam. Hey, Scott. So I cover Congress, you cover the White House. But before we both did that, we were both member station reporters. Where we covered politics. I started at KQED. I was at WOSU in Ohio, KPCC. And I also worked at KQED.

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I may not be able to go to my favorite restaurants or rely on public transportation, but maybe I'll run into Tamara Keith. Anyway, this podcast was recorded at 2.12 p.m. on Monday, December 3rd. Things may have changed by the time you hear it. Okay, here's the show. Oh man, I'm bummed that I didn't run into her, but the city was completely shut down. It was unbelievable. Well, hey there. It's the NPR Politics Podcast. President Trump and Xi Jinping have called a ceasefire in the U.S.-China trade war. This comes while Trump is promising to cancel the North American free trade agreement.

I'm Asma Khalid, political reporter. I'm Tamara Keith. I cover the White House. And I'm Scott Horsetate. I also cover the White House. So President Trump met with China's President Xi Jinping at the G20 summit. And Tam, you were there covering this all. So what exactly happened? Well, so they held a working dinner with top members of the government from the U.S. and from China over a dinner of steak and Malbec and other things. They discussed the sort of difficult trade relationship that exists right now between

the U.S. and China. When they came out of that meeting, President Trump declared it a great success. It's an incredible deal. It goes down, certainly if it happens, it goes down as one of the largest deals ever made. It's a deal between the United States and China made by the president and the president. And it'll have an incredibly positive impact on farming, meaning agriculture, industrial products, computers, every type of product. So what happened here is there were these tariffs that are in place now and were supposed to amp up and get even more significant in January. What they agreed to is putting the additional tariffs on hold. And in exchange for that, China would buy more U.S. products and begin the process of addressing some of the larger concerns that the U of a trade war. Would they come out of it with some grand peace deal? Or would the meeting go badly?

And would they walk out and, you know, sort of blow up the global trading system? And in fact, neither of those things happened. Instead, they sort of agreed to a ceasefire. They dialed back the anticipation of an escalation in the trade war. But they kind of left all of the outstanding issues unresolved. And they said, well, we'll just keep talking about those for the next three months. So basically, they agreed to keep talking, walked out and said, wow, we've got this amazing deal. But that's my question, right? Because if the United States is not imposing 25% tariffs on

China come January, as we were expected to do as a country, this kind of all sounds murky, because beyond agreeing to talking, what exactly did China agree to do? Well, they, in theory, agreed to purchase more U.S. goods, more U.S. products, agricultural goods and energy. What isn't clear is just how big those purchases would be, when they would start and how we'd know that they were part of this deal. Because what Larry Kudlow, who's a top economic advisor at the White House, is saying is these won't be government purchases. These will be private industry purchases. So we don't actually really know what's going to materialize. You're right. You are absolutely right. This is just a promise to continue talking. But in terms of even

what China is agreeing to purchase additionally from the United States, that is unclear is what you're saying. Yep. We don't know what they're purchasing. We don't know how much of it they're buying. What we do know is that so far there's been no agreement on the underlying concerns that led to the trade war, which are things like China stealing intellectual property from American companies, things like China forcing American businesses to share their technological know-how as a cost of doing business in China. Those are the beefs that caused the president to impose tariffs on China in the first place, and those have not been resolved by this ceasefire. So how long do we expect this temporary truce to last at this point? They've

agreed to basically keep talking for 90 days. What the White House has said is the tariff, the 10% tariff that we're set to go to 25% on January 1, we're going to hold off on raising those tariffs for 90 days. And during that time, we hope to make some progress on other sticky trade disputes between the U.S. and China. If we don't make progress on those sticky trade disputes, then the tariffs will, in fact, go to 25 percent. And there's also sort of out there a threat that the president could extend tariffs to another $200 billion worth of Chinese imports. But there's also nothing to say that at the end of these 90 days, they don't have another dinner, sit down, look in each other's eyes and decide that they're going to keep talking and postpone it again. the fact that both President Trump and Xi Jinping came together kind of just right on the brink, right before these higher set of tariffs were supposed to take place, and decided to hold off and talk instead. Is that a sign that this trade war is having a substantial impact,

maybe both in China as well as here in the US? I think it may very well be. Now, the White House has taken kind of a tough line. They say we're much better prepared to weather this trade war than China is. We could hang tough if we wanted to. But the reality is that this trade war is causing real pain both in the U.S. and in China. Even the 10 percent tariffs are having a real effect on a lot of businesses and some consumers in the United States. I talked just last week with a fellow who's in the Christmas light importing business. Most of the Christmas lights that we use in this country come from China. They're all subject to a 10% tariff now. So if you're decorating your Christmas tree, you might be paying 10% more than you would have a year ago. That may not sound like much if you're

at the hardware store buying a string of lights for seven or eight bucks. But if you're buying them in bulk, it adds up to real money. And we've seen both the U.S. economy and the Chinese economy downshift from their growth levels earlier in the year. And Scott, when you talk about the Christmas lights, it reminds me of something that I think we need to point out. Tariffs are a tax, is what they say. But tariffs are not a tax on China. They are ultimately a tax on consumers. It's not like China is paying 10 percent. It's actually U.S. companies, as they're importing these things, are having to pay 10 percent. And that is getting passed on to consumers. Ultimately passed on to consumers. And then, of course, China has imposed tariffs of its own in retaliation, and that has hit U.S. exporters. They're having a harder time selling their products now in China. So, Scott, to that point, I mean, the industry we consistently keep

hearing is being hit particularly hard by the Chinese retaliatory tariffs is the farming industry, particularly soybeans. Yeah, the U.S. has been a major exporter of soybeans to China. They are mostly used for animal feed. And China had been buying last year, I think, $14 billion worth of soybeans. In the harvest that just wrapped up, there were basically no soybeans being exported from the U.S. has been a major exporter and where the producers who would be affected are in either politically sensitive states, states that were important to President Trump's victory. They're trying to make a point here, get the president's attention by hitting the people who've been Trump supporters. But it sounds like a lot of the pain you're saying that's already been inflicted on certain industries is likely to stay because those are the current tariffs we're facing. Isn't that right? That's right. And let's also not forget that this very same weekend, Trump also signed a new trade deal with Mexico in Canada.

We're going to take a quick break and we'll be back in a minute to break down what that was all about. This message comes from NPR sponsor, Google Home Hub. You know how your phone has 20 different apps to control your lights and everything in between? That's why there's Google Home Hub, which shows you your home at a glance. Like the kitchen lights or that sound you just heard in the living room. Just one swipe on the screen and you can control your smart devices from one place. That's help at a glance with Google Home Hub. It's a display with the Google Assistant built in.

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Angeles. Learn more at Sotheby'sInstitute.com. Hey there, we're going to get back to the show in a second, but I wanted to give you another reminder that if you like what you hear, you can support this podcast by supporting your local public radio station. Just go to donate.npr.org slash politics to support fact-based journalism. OK, back to the show. And we're back. So let's talk now about USMCA, the United States-Mexico-Canada Agreement. That name refers to the three countries that signed the deal this weekend. So, Tam, what was in this new deal?

So this is a deal that had been negotiated over some months, and with the three leaders sitting down at a table and signing these documents. President Trump signing with a much thicker pin than the other two leaders and like a Sharpie. And and in essence, what this is, is a new version of NAFTA, the North American Free Trade Agreement. That's something that President Trump campaigned against during the presidential campaign, said he was going to tear it up and throw it away. This is a a modernized version of that 25-year-old trade agreement and has some other new things related to labor. It has some new things related to dairy products. But the contours of it are very much similar to NAFTA. We might say that NAFTA was, in this week when we're all remembering the former President George H.W. Bush, NAFTA was initially negotiated on the elder Bush's watch. It was ratified under President Clinton, but it was sort of a product of the first Bush presidency. And it was an attempt to create a continent-wide free trade zone that would be better poised to compete with the rest of the world. And although it has certainly been criticized by some, it has basically worked. It has

resulted in a quadrupling of trade among the U.S., Mexico, and Canada. It's allowed industries throughout North America to be more competitive relative to countries in Asia and Europe. And so this new USMCA updates the quarter-century-old agreement. It incorporates things that weren't really contemplated during the first Bush administration, like the Internet and digital commerce. But it is not radically different than NAFTA, even though President Trump would like to present this as a completely new deal. It's kind of NAFTA 2.0. There was this funny thing at the signing ceremony

where each of the leaders got up and spoke and President Trump kept referring to it as USMCA because that is the name he wants to stick. And Canadian Prime Minister Justin Trudeau kept referring to it as new NAFTA, sort of pointedly referring to it as new NAFTA. I mean, in some ways, this is just about how you want to brand the thing, because it is conceptually very much a new NAFTA. It is very much conceptually the same idea as NAFTA with much of the same framework as NAFTA. As Tam said, it does pry open the heavily protected Canadian dairy market just a little bit. That's something that'll be welcomed by dairy farmers in this country. The biggest change it makes, though, is in the auto industry, where it says in order to qualify for tariff-free status, that is, in order to sell a car without tariffs among the three North American countries, it has to contain more North American content.

And what's more, it has to contain a certain amount of content made in factories that pay at least $16 an hour. So this new deal has to be signed off by Congress, right? And presumably this is going to happen when a situation where the Democrats control the House. Do we have any sense that Congress is fully on board with this? No. Democrats would say that the deal that's been negotiated thus far is a good start, but they are not perfectly happy with the way it is. But President Trump is going to try to force their hand. He told us on Air Force One that he is planning to pull out of NAFTA. That'll be terminated. And so Congress will have a choice of the USMCA or pre-NAFTA, which worked very well. You go out, you negotiate your deals. It worked very well. I mean, Congress is going to have a choice either way. The choice right now is between the old NAFTA and the new NAFTA.

President Trump wants to make the choice between the new NAFTA and no trade agreement at all. What's the timeline in all of this in terms of both when the new USMCA will take effect, but also when the old NAFTA will be out? Well, we do expect that the new NAFTA will be considered by the new Congress, that is a Democratic majority in the House and a slightly larger Republican majority in the Senate. And the president, if he goes through on his threat to announce that he's withdrawing from NAFTA, that starts a six-month clock. So basically that would give lawmakers six months to approve the new NAFTA before the old NAFTA went away.

And in terms of when he might sign this thing to pull out of NAFTA, he said it would be in the next short period of time, which is... Two weeks. It's sort of a Trump language for unclear. And you know, with all of these trade negotiations now, we are kind of getting a feel for what the M.O. of this president is when it comes to trade negotiations. a very strong protectionist threat to tear up NAFTA or impose really punitive tariffs on imports. He creates a lot of anxiety in the business community and maybe by consumers and our trading partners. Then he takes a step back from the brink. He doesn't go all the way. He doesn't

make good on all of the threats that he threw out there, but he makes good on some of them. And then he cuts a sort of face-saving deal, which is often somewhat less than what he's promised. All right. Well, that was a lot of broccoli. And you know who loves broccoli? No, he doesn't. Not the late President Bush. He hated broccoli, famously. And I hated broccoli, too, when I was a kid, but I grew to kind of like it. All right, well, that is a wrap for today.

We'll be back soon at the very latest by Wednesday with a recap of George H.W. Bush's funeral. Until then, be sure to subscribe to our newsletter. You can head to npr.org slash politics newsletter to get a digest of all of our best digital stories. I'm Asma Khalid, political reporter. I'm Tamara Keith. I cover the White House. And I'm Scott Horslake. I also cover the White House. And thank you for listening to the NPR Politics Podcast.