Japan Deal Raises Fear Trump Undercut Goals

Japan Deal Raises Fear Trump Undercut Goals

Bob Zoellick and Mike Froman.
Both were U.S. trade representatives, Bob Zoellick for
President George Bush, Mike Froman for President Obama.
And they both worked on these huge deals.
And they’re the detritus of GATT and Uruguay and the rest of it.
And the deals on which they worked spanned years, thousands of pages long.
I got them together in a room. And they really are you can sense old
friends there, people on whom each other relied for advice and wisdom as they
approached this job. But we talked about the moment we’re in
because fundamentally, the thing that they built this global trading system is
what President Trump is trying to tear down.
And, you know, there was no animus about that.
It was never in this conversation. But we talked about the objectives of
President Trump’s trade war, why he’s imposing all of these tariffs.
And it was just fascinating to hear them, what they’ve observed about the
trade war thus far, where they think it’s headed.
You know, I started off by asking, have you been surprised by anything that’s
unfolded here? Both of them said no.
I mean, this was telegraphed by President Trump.
He hates these multi multilateral, giant trade deals.
He wasn’t making a secret of the fact that he wanted to dismantle them and
destroy them. But just a fascinating conversation
between these these two individuals and myself.
I mean, I felt kind of like a fly on the wall for some part of this, just about
sort of what’s been unfolding, what they think is going to happen that some folks
are are looking at that Japan deal that is a big trading partner.
So this one we got to pay attention to. Some folks are saying that maybe
President Trump let them off too easy simply because maybe he had that carve
out for the autos. Isn’t the auto sector where we have most
of our trade deficit? So much to unpeel here.
And look, the Japanese made, I think, eight trips to Washington over the
course of these last six months to try to get one of these deals.
And lo, they did. Look, I look at it and I think of a few
things. The first is this very sizable
commitment to investment that the Japanese have made.
It reminds me of what we saw back during the first Trump term with with China.
They also made a promise to do sizable investment in U.S.
companies. Of course, that didn’t come to pass.
So we’ll see how all of that plays out. But you bring up the automakers, we have
a 15% tariff now according to this deal on Japanese autos, that is less than the
global tariff on cars. So you have the big three automakers in
the U.S. essentially crying foul because as they
see it, Japan is getting preferential treatment here.
And it kind of highlights the fact that there is there’s ambiguity about the
motivations here. Wasn’t the point of this to improve
manufacturing, domestic manufacturing here in the U.S., How is this possibly
going to do it? I mean, Zellick and Froman go back to
the absolute trenches of can we trust the Japanese?
I look at the agreement and start to editorialize.
It’s naive, but the President has very clear unilateral dealmaking,
transactional making opinions, and the Japanese seem completely removed from
that. They’re looking at a immensely long term
unit growth process to move more Toyotas to America.
Right. That has been one of the main
difficulties here is the urgency of this White House and this president in
juxtaposition with the way that countries, including Japan, have
approached this process in the past, like in Froman Live.
Absolutely. And so we talked a bit about that, the
motivations that President Trump has. So one is leverage.
We’ve seen the president use tariffs as a way of getting folks to the table on
other issues, dealing with fentanyl, dealing with these other wars.
Revenue is another one. And something that Mike Froman said is
that since these tariffs have been in place, they’ve raised $100 billion.
So in the near term, it has been successful in that regard.
Now, something that Bob Zoellick said to me is you have that in the near term.
But if this really diminishes the U.S. economy, how is that going to play out
long run? The other is deindustrialization.
Going back to what Paul brought, sorry, bringing back jobs, manufacturing here
to the U.S., something that was, we were told, a keystone of this whole process
deals with automakers and all of that. How that plays out will be another thing
entirely. But it’s not been the focus of President
Trump. Somebody Paul from Detroit is happy with
the Japanese deal. I’m searching for the first person.
And so we had it Matt Miller here one more year on earth.
So the trumps. President trump is over at the Fed
building today. Is this just some noise here to kind of
another way for him to jab at Fed Chairman Powell?
So the Fed chairman has said to the inspector general at the Fed he welcomes
an investigation into this renovation process that’s been underway for for a
few years now. Of course, it is a sizable cost overrun.
He’s been frank about that. He’s been frank about it in
congressional testimony. And he invited the president’s deputy
chief of staff, director of the OMB, others, to come and take a tour of this
facility. We look at the guidance that we got last
night from the White House there on the schedule.
Is President Trump going to the Federal Reserve today at 4:00?
It’s a rare thing, Yeah. Count on one hand how many times the
United States has gone over to the Fed, which isn’t very far.
It’s a stone’s throw away from from the White House.
But we’ll see sort of what unfolds there.
Of course, there has been so much heated rhetoric from from the president.
Right. I don’t know what he’s going to look at,
what he’s going to see. There’s so much concern about the roof
and the fountains and the elevators and all of that.
But it just highlights the fact that this is now the line of attack that
we’re seeing from this White House on the Fed and perhaps their only hope here
to get any kind of grist from from Congress when it comes to pushing back
on on the Fed and its chair. We don’t.

David Gura, host of the Bloomberg “Big Take” podcast, discusses his interviews at the recent Colorado Security Summit and key takeaways from the US’s trade deal with Japan.
US industries and protectionists are raising alarms with President Donald Trump’s pact with Japan, saying it risks undercutting his stated goals of rebalancing America’s trading relationships and reviving domestic manufacturing.
Trump and his top negotiators on Wednesday hailed the deal as a potential model for other countries hoping to win tariff concessions, citing Tokyo’s pledge to create a $550 billion fund for US investments. 
The president’s decision to grant Japan relief on automobiles, however, provoked criticism that the agreement wouldn’t address the main source of the US’s trade deficit with Japan even as it disadvantages Detroit’s Big Three. Around 80% of the US-Japan trade gap is in cars and car parts.
Tuesday’s announcement marked the latest signal that Trump is willing to negotiate on industry-specific duties on products including chips and pharmaceuticals, potentially undermining the most durable pillar of his tariff strategy.
The reaction underscores the risks of the president’s transactional negotiating style. Industries that have championed much of Trump’s trade strategy and stand to benefit from robust levies on foreign rivals could be left in the lurch as his plans shift.
“Any deal that charges a lower tariff for Japanese imports with virtually no US content than it does North American built vehicles with high US content is a bad deal for the US industry and US auto workers,” said Matt Blunt, president of the American Automotive Policy Council that represents Ford Motor Co., General Motors Co. and Stellantis NV.
Trump defended his approach, which resulted in a deal to reduce Japan’s country-specific rate to 15% and put US levies on cars and parts at the same level — lower than the 25% global charge on vehicles.
“I WILL ONLY LOWER TARIFFS IF A COUNTRY AGREES TO OPEN ITS MARKET. IF NOT, MUCH HIGHER TARIFFS! Japan’s Markets are now OPEN (for first time ever!). USA BUSINESSES WILL BOOM!” Trump posted.
His Commerce Secretary, Howard Lutnick, on Thursday called gripes from US automakers “silly” and said that manufacturing executives he spoke to “are cool with it.”
“When your competitor goes from 25% against them to 15% against them, I guess you’re a little bummed out. But come on, there’s no tariff if you build it in America,” Lutnick said on CNBC.
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