How Trump Is Manipulating U.S. Trade Policy to Suit His Own Political Interests

Kimberly Ann Elliott 

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For just the third time in modern American history, the U.S. House of Representatives is investigating whether a president should be removed from office. Speaker of the House Nancy Pelosi has so far kept the impeachment inquiry narrowly focused on President Donald Trump’s pressure campaign to get Ukraine to dig up dirt on his political opponents. But even as the House approved a resolution last week setting out the next steps in that inquiry, there have been reports of other instances in which Trump appears to be manipulating U.S. policy—in this case involving trade—to serve his narrow political interests, rather than those of the country as a whole.

One of those instances was related to the Ukraine scandal. The others involved allegations of improper influence over the administration’s process for granting exemptions from steel and aluminum tariffs, and concerns about the plans for implementing the automobile rules of origin under the U.S.-Mexico-Canada Agreement, the renegotiated North American Free Trade Agreement known as the USMCA.

The first revelation adds to what is already widely known about Trump using U.S. military assistance and the imprimatur of a White House visit to pressure Ukrainian President Volodymyr Zelensky into investigating bogus allegations of corruption involving former Vice President Joe Biden’s son, among other things. In late August, after the aid was suspended, U.S. Trade Representative Robert Lighthizer was prepared to restore some of Ukraine’s benefits under the Generalized System of Preferences program, which removes import tariffs on designated products from eligible countries. Those benefits had been suspended at the end of 2017 because of long-standing concerns about Ukraine’s inadequate protection of intellectual property. But the Ukrainian government had passed legislation to partially address the problem, and Lighthizer wanted to reward it for that.

When John Bolton, then-national security adviser, learned about the proposal, however, he reportedly warned Lighthizer that Trump “probably would oppose any action that benefited the government in Kyiv,” according to The Washington Post. The Office of the U.S. Trade Representative then withdrew the recommendation to restore the tariff-free benefits, but later reversed course in October, a day after The Washington Post reported the delay. The administration quietly announced the restoration of Ukraine’s trade benefits in a Friday night press release—a common practice for U.S. officials wanting to avoid attention. In this case, it came just before the Washington Nationals were due to host the first World Series game in the nation’s capital in nearly 90 years.

Democratic senators have demanded details about the delay from Lighthizer, saying in a letter that “it would raise grave concerns both domestically and internationally if U.S. trade policy were used as a bargaining chip to achieve partisan political ends.”

Questions of improper political influence, if not potential abuses of power, may not be limited to Ukraine.The second instance of apparent political interference in trade policy came just a few days after the Ukraine tariff announcement. A memorandum from the Commerce Department’s internal watchdog criticized its handling of requests for exemptions from the tariffs on steel and aluminum that the Trump administration imposed last year, nominally on national security grounds. The Commerce Department had created the process to address concerns that the tariffs were raising costs for American companies using steel and aluminum, especially in cases where no comparable domestic product was available. But there were problems with it from the beginning, starting with the fact that the department vastly underestimated the number of requests it would receive and was dramatically understaffed to deal with them. Congress appropriated additional funds for the agency reviewing the requests, and things sped up. But the review remained opaque, especially with regard to the Commerce Department’s responses to domestic producers objecting to its exemption decisions.

As of March of this year, scholars at George Mason University reported that half of the requests for exemptions from the steel tariffs and two-thirds of those for aluminum had been approved, with most of the rest still pending. But in cases where a domestic producer objected to the requests, less than 1 percent of steel requests and less than 3 percent of those for aluminum were approved. The Office of the Inspector General found that meetings and phone calls with domestic producers raising objections were not documented and that the lack of transparency—along with changes in decisions made after those conversations—created an appearance of “improper influence.” Sen. Elizabeth Warren, one of the frontrunners in the Democratic presidential primary, had requested the review after her staff discovered that a Russian aluminum company’s subsidiary that had been subject to U.S. sanctions received an exemption from the tariffs. In general, however, critics have argued that the process reflected the political influence of large domestic producers of steel and aluminum and favored their interests over those of smaller companies using imported steel and aluminum.

But in the most troubling case yet of trade policy merging with the political interests of the White House, Bloomberg reported last week that the Trump administration wants implementing legislation for the USMCA to include authority for it to unilaterally decide how to apply the rules of origin for automobiles. The new rules require that for automobiles to qualify for duty-free treatment under the agreement, 75 percent of the total value of the vehicle must be produced in one of the three partner countries, up from 62.5 percent under NAFTA. In addition, 70 percent of the steel and aluminum used must be sourced from the trade deal’s three countries, and 40 percent of the value of each vehicle must be made in factories with an average wage of $16 an hour or higher.

Because of the complexity of the rules, and the fact that they will raise costs for producers, the USMCA allows companies to develop transition plans and take advantage of a five-year grace period before fully implementing them. According to Bloomberg’s report, the White House wants unilateral authority to decide whether or not to approve individual companies’ plans. Automobile companies fear that this discretion could be abused to pressure them to invest or increase production in the U.S. rather than Canada or Mexico. Given the opacity of the steel and aluminum tariff exemption process, and the arbitrary decision-making around aid to Ukraine and its eligibility for trade preferences—along with reports that Apple CEO Tim Cook was able to get some of his products off the China tariff list by appealing personally to Trump—this concern does not seem unfounded.

These instances of trade policy seemingly being manipulated to serve Trump’s narrow political interests underscore that questions of improper political influence, if not potential abuses of power, may not be limited to Ukraine. There’s no way to defend this blatant politicization of U.S. foreign policy.

Kimberly Ann Elliott is a visiting scholar at the George Washington University Institute for International Economic Policy, and a visiting fellow with the Center for Global Development. Her WPR column appears every Tuesday.