Josh Barro describes Trump's approach to negotiations as follows:
Donald Trump has a negotiating tactic he really likes: Threaten to do something someone else will really hate, and then offer to stop if they give you what you want.
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One of his tactics on trade, for example, is to impose a variety of tariffs on Canada and Mexico on "national security" grounds in hopes of getting them to agree to modify NAFTA according to his terms.
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You would think that a guy who so highly rates the importance of looking strong would know better than to put his counterparties in a position where giving him what he wants makes them look weak and small.
And yet, he has done that, over and over.
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There will be occasions where Trump's tactic of hostage-taking and threatening and generally being too much of a pain to be worth fighting against will work. But on average, it will not.
As an illustration, this was from USTR on Friday:
The Office of the United States Trade Representative (USTR) today released a list of products imported from China that will be subject to additional tariffs as part of the U.S. response to China’s unfair trade practices related to the forced transfer of American technology and intellectual property.
On May 29, 2018, President Trump stated that USTR shall announce by June 15 the imposition of an additional duty of 25 percent on approximately $50 billion worth of Chinese imports containing industrially significant technologies, including those related to China’s “Made in China 2025” industrial policy. Today’s action comes after an exhaustive Section 301 investigation in which USTR found that China’s acts, policies and practices related to technology transfer, intellectual property, and innovation are unreasonable and discriminatory, and burden U.S. commerce.
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The list of products issued today covers 1,102 separate U.S. tariff lines valued at approximately $50 billion in 2018 trade values. This list was compiled based on extensive interagency analysis and a thorough examination of comments and testimony from interested parties. It generally focuses on products from industrial sectors that contribute to or benefit from the “Made in China 2025” industrial policy, which include industries such as aerospace, information and communications technology, robotics, industrial machinery, new materials, and automobiles. The list does not include goods commonly purchased by American consumers such as cellular telephones or televisions.
This list of products consists of two sets of U.S tariff lines. The first set contains 818 lines of the original 1,333 lines that were included on the proposed list published on April 6. These lines cover approximately $34 billion worth of imports from China. USTR has determined to impose an additional duty of 25 percent on these 818 product lines after having sought and received views from the public and advice from the appropriate trade advisory committees. Customs and Border Protection will begin to collect the additional duties on July 6, 2018.
The second set contains 284 proposed tariff lines identified by the interagency Section 301 Committee as benefiting from Chinese industrial policies, including the “Made in China 2025” industrial policy. These 284 lines, which cover approximately $16 billion worth of imports from China, will undergo further review in a public notice and comment process, including a public hearing. After completion of this process, USTR will issue a final determination on the products from this list that would be subject to the additional duties.
One view of the administration's approach to trade negotiations is that the Section 232/301 tariffs are all about creating leverage to open foreign markets. Thus, USTR's announcement about duties being imposed under Section 301 is supposed to induce China to make more significant concessions in the negotiations that have been taking place and that will continue. As Ambassador Lighthizer said: "Our hope is that it doesn't lead to a rash reaction from China. I'm hoping that they view this as an opportunity to move to the next level. We hope this leads to further negotiations and to China changing its policies." (Of course, it may be the case that the administration does not, in fact, care if other countries open their markets. Rather, it is just looking for an excuse to impose tariffs.)
At the end of all this, political scientists and others are going to have some wonderful material to study in relation to Trump's negotiating strategy. The results are not in yet, but eventually we will have some good data on the impact of both the 232 and 301 tariffs on trade negotiations.
What impact will the Section 232 steel and aluminum tariffs have on trade discussions with Canada, Mexico, the EU, South Korea, Argentina, Brazil, Australia, China, Japan and others? So far, aside from reports of some very minor amendments to KORUS, no one has liberalized in response to this pressure. So if the argument is that the tariff threats lead to liberalization, there is not much evidence of this yet. On the other hand, South Korea has agreed to restrict some of its exports, as have Argentina and Brazil to a lesser degree (Australia has agreed to something, but I'm not sure what it is). So if the tariffs are just supposed to lead to "concessions" of some sort, there is better evidence. Unfortunately, these particular concessions will harm the U.S. economy.
And what impact will the Section 301 tariffs have on trade talks with China? How does it compare to an approach that focuses on WTO complaints or normal negotiations? Will we be able to compare the U.S. approach to what the EU is doing and see what works better?
Just about everyone, including me, is pretty skeptical of the administration's approach, partly because we don't think it will work to open foreign markets, and partly because of the more general damage it does to the system and to U.S. credibility in future negotiations. Perhaps the silver lining here is that in the end, we will have some good evidence that this strategy does not work, so no one will try it again.
