Trump to up pressure on global trade 'cheats'

Andrew BEATTY
 

President Donald Trump will on Friday launch an investigation to root out unfair trade practices around the world, threatening to target countries that contribute to America's substantial trade deficit.

In a symbolic move, Trump will sign an executive order tasking staff to pinpoint countries and goods responsible for America's nearly $50 billion a month trade deficit.

Much of that deficit data is already publicly available and well known, but Trump's initiative doubles down on his tough trade rhetoric and is being taken as a protectionist warning shot across the world.

Top administration officials described the order as a step toward converting "America first" campaign promises into action.

Throughout his presidential campaign, Trump vowed to put America's trading relationship with the world on a more advantageous basis.

Commerce Secretary Wilbur Ross said the order would result in analysts going "country by country, and product by product," reporting back to Trump within 90 days.

They will look, he said, for evidence of "cheating," inappropriate behavior, trade deals that have not lived up to their promise, lax enforcement, currency misalignment and troublesome World Trade Organization constraints.

"It will form the basis for decision making by the administration," he said.

The order comes a week before Trump meets Chinese President Xi Jinping and is likely to be seen as a warning shot across Beijing's bow.

"Needless to say the number one source of the deficit is China," Ross said, before listing more than a dozen other "countries that will potentially be involved."

The others were: Canada, France, Germany, India, Indonesia, Ireland (Other OTC: IRLD - news) , Italy, Japan, Malaysia, Mexico, South Korea, Switzerland, Taiwan (Taiwan OTC: 6549.TWO - news) , Thailand and Vietnam.

However, Ross said the presence of a deficit does not necessarily mean that retaliatory or remedial action would be taken.

"It's a little bit hard to say that someone is an evildoer if they are providing a product we can't," he said.

"In some cases, it will simply be that they are better at making the product or can do it far cheaper than we can.

"This is not meant to say that everybody on this little list is an evildoer."

- Trade reset -

In a second executive order to be signed Friday, Trump will order the government to better recover trade duties on products that are subsidized by foreign governments or dumped on the US market.

The proposals being considered by US customs officials could impose more substantial bonding requirements at the border or examine products' risk more stringently.

Listing various problem areas, Navarro said: "This is a big deal. It's steel, chemicals, agricultural products, machinery -- it's the whole gambit."

Head of the World Trade Organization Roberto Azevedo said there was a need for clarity on US trade policy, to see how public declarations translate into policy.

"It is difficult to predict and speculate about what US trade policy will be. It's a very important country, one which the whole world has its eyes on."

In a sign of brewing unease, Germany on Friday protested over planned US punitive anti-dumping duties on steel plate products from companies in that country and half a dozen others.

German Foreign Minister Sigmar Gabriel charged the step breached global trade rules and unfairly disadvantaged suppliers in Germany, as well as in Austria, Belgium, France, Italy, Japan, South Korea and Taiwan.

Italy also voiced alarm, amid fears that products like Vespa scooters could be hit by punitive duties.

"Trump declares war on the Vespa" said a headline in national daily Il Messaggero, reflecting the tone of most of the media coverage on an issue that dominated front pages and topped news bulletins.

The European products are vulnerable to potential measures because of a transatlantic dispute over Europe's ban on beef produced with the aid of hormones that pre-dates Trump coming to power.

Along with mopeds, the symbolic Italian products that could have punitive duties slapped on them reportedly include tomatoes, salami and Parma ham, and San Pellegrino mineral water, now owned by Switzerland's Nestle (Swiss: NESN.VX - news) .

Navarro insisted the new measures would fall within rules at the World Trade Organization, where some might see the United States erecting a technical barrier to trade.

"There is no issue here," he said. "We've been collecting these duties -- we just haven't been doing it very well. The WTO is silent on the issue of incompetence."

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