Leverage Is Everything: Understanding the Trump Administration\u27s Linkage between Trade Agreements and Unilateral Import Restrictions

This paper offers an understanding of the Trump administration\u27s (Administration) often-perplexing approach to international trade policy and, in particular, the Administration\u27s repeated threats to withdraw from or renegotiate bilateral, regional and multilateral trade agreements. The central premise offered here is that all Administration trade actions--including both its approach to trade agreements and its threats or use of unilateral import restrictions--must be seen in terms of two fundamental goals. The first is to eliminate U.S. trade deficits with foreign countries (individually or collectively). The second is to restore the U.S. manufacturing sector by limiting imports and by bringing back to the U.S. manufacturing that had been moved to other countries. Renegotiation of trade agreements and imposition of import restrictions are closely integrated tactics used to accomplish these goals. Thus, neither should be seen as an end in itself, but rather as leverage toward achieving whatever specific goal the Administration seeks at the time. In one situation, import restrictions (or threat thereof) may serve as leverage in a trade agreement negotiation. In another situation, a trade negotiation may be conducted in a manner that provides leverage to obtain a limitation of imports. In analyzing this approach to trade, this paper addresses the following: A brief summary of the Trump Administration\u27s trade policy and objectives; specific examples of the Administration\u27s leverage-based strategy in action; and more detailed discussions of the Administration\u27s leverage strategies in the three most important areas of U.S. trade today: US-China trade, the effort either to change or withdraw from the World Trade Organization, and the attempt to reshape the structure of North America by renegotiating or withdrawing from the North American Free Trade Agreement