This monograph on the linkages between multinational companies and small/medium-sized firms from Prof. Haar.
The walk over burning coals with tariffs rattling has been completed and soothing coolness has returned. EU Commission President Juncker came to Washington with a publicly pronounced low level of expectations. But, as could be expected, when it was all said and (hopefully) done, acerbic argument gave way to collegial progress. The United States will be able to sell more of its products to Europe, and, in exchange, the treat of prohibitive tariffs will be eased.
Some believe that these developments were unexpected – like Manna from heaven. Not so! The Trump Administration had undertaken many steps to indicate that trade was a key concern. Unlike the experience of other administrations, President Trump persisted in his intent to support American business domestically and internationally. The shot across the bow of the ship Europa helped to concentrate the minds of policy makers. Yes, they still have other problems, such as NATO, Household deficits, Brexit, migration, and more. However, with the imposition of significant tariffs, Trump made it clear that trade had to move up on the list of important policies to consider.
After much hesitation, the adjustment steps began to take place. And rightfully so, when one considers that it has been more than 70 years, three generations , since the setting in place of U.S. sponsored world trade mechanisms such as the International Monetary Fund, the World Bank and the General Agreement on Tariffs and Trade. Back then, the principal dimension was the strengthening of European economies in order to improve local standards of living and achieve a meaningful defense against the then Soviet Bloc. In support of these goals, the U.S. willingly accepted its leadership cost to a growing excess.
The world changed, as did its opportunities and threats. But the U.S. negotiation approach stayed the same, support others, don’t worry about the drawbacks to the privileged U.S. firms. Over time, the U.S. started to fall behind – lots of imports, few exports, and still no major support from the government. When Trump took on his campaign, he promised changes in the trade picture, and he even lived up to that goal after he won the election. He started to use an anvil and hammer approach to break through old fashioned restrictions and chains. When other nations complained, he warned them of the sparks that could fly during the hammering in a larger forging process. His watchword was ‘reciprocal’ relations.
Now, it has worked out. With reason on both sides there will be progress and stronger linkages. It is gratifying to see how past barriers can be converted into linkages. Decades ago, for example, the river Spree in Berlin clearly marked the distance and separation between East and West Germany. Today, the very same river offers easy crossing and pulls the two river banks together. Its flow encourages rather than inhibits linkage.
The willingness to acknowledge shortcomings and engage in the collaborative implementation of solutions is a new engine for growth. Trump has coached this right, the EU and Juncker are good co-captains. Let the new game begin!
Professor Czinkota (email@example.com) teaches International Business and Trade at Georgetown University and the University of Kent. His forthcoming book in October 2018 is In Search for the Soul of International Business.
This commentary was published first by The Hill; Washington D.C. On July 29, 2018
Here is a repost of my televised discussion with China Global Television Network’s Elaine Reyes on the possible outcomes for the US-China trade deal, following the agreement on May 19th. Enjoy!
My latest book is Fifth in my “As I…” series, “(Such as ‘As I was thinking,’ As I see it’..) this latest title is: .As I Search for the Good Soul of International Business and Trade”. I address the need to consider and focus on the good soul and how such consideration needs to reflect the spiritual and emotional links to core issues of international business and trade. I propose that a responsible focus on the soul plays a key international role in strengthening freedom, progress and quality of life.
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Trump administration’s trade strategy is shaking up the global economy. Quitting agreements, talks of new deals and tariffs threats. There is much to keep up with Washington’s changing economic policies.
CGTN’s Daniel Ryntjes reports.
The most recent fast-forming development is that Donald Trump has ordered a national security investigation into automotive imports. That may lead to new tariffs on vehicles from Europe, Japan, and South Korea. The Commerce Department, led by Secretary Wilbur Ross will look into cars, trucks and auto parts. He is using the national security provision in U.S. trade law known as Section 232 also being used in the steel and aluminum cases, which makes it harder to challenge at the World Trade Organization.
Dr. Derek Scissors, an economist, and scholar at the American Enterprise Institute said the administration is not geared up for central planning.
“I think parts of the administration are thinking strategically and other parts are thinking strategically in a different way and it adds up to no strategy,” Scissors said.
It’s a house divided. Peter Navarro is seen as the biggest trade hawk. He’s the Director of the White House National Trade Council and is in favor of direct and sustained confrontation.
Those with a more traditional approach to global trade include U.S. Treasury Secretary Steven Mnuchin and Director of the National Economic Council Larry Kudlow.
Dr. Scissors adds that “the United States doesn’t seem to be sure what we are trying to accomplish. So the tactics of putting China or other countries off balance and that’s worked fine. But if you don’t know what you are trying to win, then you can’t win.”
For a broader perspective, the official responsible for threatening tariffs for the purpose of renegotiating trade under former U.S. President Ronald Reagan was Michael Czinkota, now an associate professor of international business and marketing at Georgetown University’s McDonough School of Business. He thinks tariffs are good “as a tool for attention, for really thinking through, as long as you never use them.”
He thinks the current tariff threats are just that. “I would be amazed if there would be a broad blanket implementation of tariffs.”
The U.S. has continued to send out mixed signals, but the less hawkish in the administration have aligned with China’s statements about backing away from a ‘trade war’ following meetings in Washington with President Xi’s Special Envoy Vice-Premier Liu He. China said it has agreed to further open up its markets to U.S. agricultural products while negotiations continue.