Trade

President Trump’s ‘Tough Talk’ Trade Policies are Paying Off

Viewed through the lens of recent events on the world stage, it is undeniable that President Donald Trump’s trade policies have resulted in concrete achievements.

China and South Korea are two excellent examples of nations that have responded to threatened tariffs in a way that has opened up markets and will result in a lower trade deficit.

A great analogy is the situation with North Korea. Recently, the North Koreans pulled out of talks to de-nuclearize the country. Although many will paint this as a failure of the strategy, it is the opposite.

First, President Trump leveled tough talk and threatened to attack North Korea if they were to follow through on threats of violence against the United States.  This rhetoric immediately got the attention of the North Koreans, prompting them to engage in secret talks with now Secretary of State Mike Pompeo.

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An agreement was quickly reached for a summit between the United States and North Korea and, although talks are on hold, President Trump’s bid to bring North Korea into direct talks with the United States paid off. Compare that to the meek strategy by the Bush and Obama Administrations that resulted in neither direct talks nor progress towards peace.

While it is clear that talks are stalled, it is also clear that there is an opening for a historic agreement between the two nations with the potential to ease tensions between North and South Korea over the long term. In the aggregate, those talks have been a success.

Likewise, Trump employed a similar strategy in regards to trade with China. Specifically, Trump came into office threatening tariffs on Chinese steel and aluminum, while simultaneously accusing China of violating international trade norms by stealing intellectual property and subsidizing Chinese corporations.

Shortly after Trump threatened to impose tariffs, a situation emerged with the Chinese telecommunications company ZTE, the subject of a seven-year ban on all cooperation with American companies over the company violating trade sanctions on North Korea and Iran.

Recognizing ZTE’s reliance on American companies like Texas Instruments, Google, Qualcomm, and Corning for software and component parts, as well as the company’s production of ten percent of United States smart phones, President Trump stepped in to suspend the ban, while forcing ZTE pay a hefty fine, thus prioritizing American interests.

On May 25, President Trump formally announced he would allow ZTE to continue operations with “high level security guarantees,” following the ouster of the company’s Vice President and Chief Technology Officer, utilizing tough talk, followed by hands-on direct negotiations on foreign policy and trade, in a way that leveraged better national security and trade agreements with our powerful Asian competitors.

While some have claimed that national security is hurt when Chinese companies like ZTE access U.S. markets, this ignores the fact that ZTE is reliant on American companies to produce their products.

Similarly, this line of thinking applies to foreign policy, where some worry that direct talks with North Korea legitimize the rogue nation and provide it more power. However, the Trump strategy of tough talk, followed by direct talks, has worked to leverage better trade relations and an improved national security posture towards North Korea.

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