The Trump administration says its policy of confrontation with trading partners, such as the trade war with China and tariffs on steel and aluminum imports from Canada and Mexico, will lead to more advantageous relations for the United States. But Bill Reinsch, of the think tank Center for Strategic and International Relations, says the promise of “short-term pain, long-term gain” is unlikely to come true.
“It’s not just short-term pain. It’s long-term pain,” said Reinsch, during a panel on “casualties of the trade war” at a Consumer Federation of America conference. In his view, U.S. tariffs, in full or in part, could remain in force if the White House does not achieve its goal in negotiations for fundamental change in Chinese trade policies.
Economist David Orden of Virginia Tech said a U.S. victory in a WTO case against Chinese farm subsidies could be neutralized if China appeals. For months, the United States has blocked appointment of judges to handle WTO appeals, and as a result the WTO soon may not have the requisite three judges to rule on disputes. The United States says the judges exceed their authority and it wants to see reforms made.
President Trump could be near his third year in office before his administration’s first major trade agreement, the new NAFTA, is ratified, said Orden. In the meantime, “we’ve lost opportunities to open new markets,” he said. Reinsch said trade disputes might change U.S. export flows permanently. “We have undermined our reputation as a reliable trade partner,” he said.