Trump Revolution continues, disagreements and all

The Trump by the end of March began airing real plans that could result in new policies. In almost every case, later than planned, and never unanimous.

The vast range of ideas, across a dozen trade-related fronts, was clearly part of the problem.

Three were laid out in general commitments before the November election

  1. Trade policy management Trump’s campaign committed to creating an “American desk” at the Department of Commerce consolidating all trade policy making. By mid-December, his team withdrew the commitment, though a spokesman said that Wilbur Ross, Trump’s nominee for Secretary of Commerce “will be our administration’s leader on setting many of our trade priorities”

Ross has now started his job. But Trump has given four other direct reports some trade responsibilities: Stephen Vaughn, the designated Acting US Trade Representative (until Trump’s nominee, Peter Lighthizer, gets confirmed),  Peter Navarro, director of the National Trade Council, Steven Mnucin, Treasury Secretary and Gary Cohn, Director of the National Economic Council. By March 10, the world’s major media were talking of a “civil war” between Trump’s advisors.  Stories are growing of events that first appeared to be White House political decisions, but in fact turned out to be the result of faction fighting that never came before Trump.

  1. Border taxes: In June, the Republican party committed to a programme of border taxes. JC Penney argued on March 10 that border taxes now propsed to Congress would force it to pay almost twice its annual profit in taxation. Different advocates, though, have described different systems – but Trump has tweeted that he didn’t like the whole idea. Ross, almost as soon as he was confirmed, reaffirmed he’d never been “in accord with anything like a 20% border adjustable tax”

Trump and his team now regard tax reform as a priority.  Though previously opposed to the border tax element in the programme Congressional Republicans favour, Trump is beginning to get reported doing things that might support a border tax. But very rarely

  1. Trade deals. Throughout his campaign Donald Trump repeated his dislike of big, multi-country trade deals like the TPP. Not so far translated into anything directly affecting apparel traders – but on March 10, US officials briefed that they hadn’t yet made up their mind on whether to continue the TTIP talks with the EU’s 27 members.

In October, Trump also committed to six things he’d do on his first day in office:

  1. On China: Trump said he would “direct the Secretary of the Treasury to label China a currency manipulator.” This commitment has disappeared. Secretary Mnuchin doesn’t agree that currency manipulation is a priority, and the two seem to have agreed to differ till Treasury officials produce a report in April. Meanwhile, new policies against Chinese imports seem on hold. US political activists are beginning to allege corruption over China’s disappearance from Trump’s hit list. 
  1. On foreign trade abuses. Trump said he would “direct the Secretary of Commerce and US Trade Representative to identify all foreign trading abuses that unfairly impact American workers”. All that has materialised is a March 1 report from Vaughn and Navarro identifying ways America might discourage “unfair” imports that compete with US domestic suppliers.  But on March 31, Trump was due to sign an Executive Order requiring Ross to review all trade deals.
  1. On NAFTA Trump said he would “announce NAFTA renegotiation.” – He did – but without the legally-required objectives or any timetable. Wilbur Ross now says he hopes to give Congress the statutory 90 days’ notice by the end of March, and that he wants to concentrate on three things: rules of origin, low Mexican wages and the state of Mexico’s currency. Nothing here about higher duties – and Ross’s worries about Mexico are irrelevant to Canada, so Ross has said he thinks NAFTA may be scrapped, and separate deals negotiated with Canada and Mexico.

But while Ross expects NAFTA talks to be completed by mid-2018, Mexico’s Foreign Secretary Luis Videgaray said – after a meeting with Gary Cohn – he expected to complete the talks this year.

  1. On the TPP Trump said he’s pull out. He did – but pulling out of a non-existent treaty is merely a gesture. The question is: what’s it a gesture of?
  1. On regulations generally. Trump would require that “for every new federal regulation, two existing regulations must be eliminated”. He’s issued that order: but the implications for sourcing apparel aren’t clear
  1. On “Buying American” Trump promised to “allow vital energy infrastructure projects [like pipelines] to move forward” He’s authorised two pipelines which “must use American steel or we’re not building one.” A week later, his spokespeople admitted that the first pipeline wouldn’t use American steel. Trump statements that show he doesn’t understand the problem are undermining his credibility with businesses.

Since the election, there have been three other indications of changing government strategy

  1. Greater commitment to Customs enforcement On March 1, Acting US Customs and Border Protection Commissioner Kevin McAleenan made it clear to businesses on the department’s Commercial Customs Operations Advisory Committee that his major priority is now to tighten up US Customs enforcement. The same applied to other key law agencies.

His concern is not just about discouraging imports: it’s about filling America’s tax revenue gap. In 2016, approximately 45% of all import duties collected by the US government came from apparel and footwear.

  1. Naïve assertions about the effect of “easing regulation”. Acting Customs Commissioner McAleenan argued that the rule-cutting programme Trump committed to in October would save money for importers.

Wilbur Ross insisted on March 3 that he and his colleagues are “are up to our eyeballs” looking for rules to undo. But fewer Customs rules, at a time officials are under pressure for more vigorous enforcement, can only mean fewer ways importers can legally avoid duties and penalties. At that March 1 meeting, there was no sign of any Customs interest in taking the responsibility for facilitating international trade as seriously as raising money and discouraging imports.

 12. A new preoccupation about the role of trade deals. Navarro has several times in the past month publicly suggested that the US could use its leverage to force trading partners to buy more US products –suggesting the US might make its imports from Germany dependent on, say, Germany buying more from the US. The idea seems to have been roundly rejected by both sides of both Houses of Congress.

Four months after Trump’s election, there is still no sign of any specific plan operational in the foreseeable future seriously promoting apparel exports or discouraging their imports. Just endlessly changing ideas, squabbles between different parts of government and meaningless promises from a President who seems unable to master his briefs.

For our industry, this Administration seems long on talk, but completely devoid of action. The only thing we know, four months after the election, is that there’ll be some kind of renegotiated NAFTA implemented after early 2018.

While border taxes remain on the Congressional agenda, no exporter to America can be sure they won’t be hit over the next two years.

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