Steve Clemons: Hi. I'm Steve Clemons. I have a question. Are Donald Trump's trade wars helping or hurting families, workers, farmers, and buyers of stuff in the US and in the rest of the world? Let's get to the bottom line.

When Donald Trump isn't talking about Democrats or the FBI and his impeachment, he's probably talking about one other thing. Want a hint?

Donald Trump: Tariffs. Tariffs. Tariffs. Tariffs. Tariffs. Tariffs.

Clemons: He's targeted China's electronics, millions of kids' Christmas toys, German cars, Europe steel and aeroplanes. He says these nations cheat and play the trade game unfairly, manipulating their currencies and dumping their products onto America's market. Since winning the elections in 2016, he's tweeted about tariffs 177 times. That's right. 177 times. That's just through early October. So what's the obsession all about? Fortunately, we have three fantastic people in the room that have the answers to these questions. They are Ambassador Carla Hills, former US trade representative and current chair of the National Committee on US-China Relations. Thea Lee, president of the Economic Policy Institute in Washington, and before that, chief of staff of the AFL-CIO, the largest federation of labour unions in the United States and probably the world. James Glassman, former US undersecretary of state for public diplomacy, founding executive director of the George W Bush Institute, and one of the most prolific authors on economic and trade issues that I know.

It's great to be with all of you. I really want to get into this trade issue, Carla, and I think it would be particularly appropriate for you to set the stage for us. Where are we today? What is the United States trying to achieve? What's your take?

Carla Hills: Well, the president has a crowded trade agenda without a question. He's tried to negotiate with Japan and has agreed to a mini deal. He has talked about negotiating with Europe. He has talked about doing and finishing the USMCA with our two northern and southern neighbours.

Clemons: That's the US-Mexico-Canada Agreement. Right?

Hills: That is right. It is the upgrade of the North American Free Trade Agreement, which he disliked. He is negotiating with China although that's really not a trade negotiation. That is a dispute settlement. So, with 28 days left in the legislative calendar, it's a crowded agenda to try to get before January 1.

Clemons: So - Japan, Europe, China, US, Mexico, is the United States winning in these disputes?

Hills: What I would urge the government to seek is open markets. That is, we have benefited for 70 years on free and open trade with partners around the world. By increasing our trade, we have also increased our possibilities of development because when poor countries trade more, they reduce their poverty. It has increased our security as we make friends. We have gravitated more to a bilateral approach, which isn't one that I would recommend. But the trade agreement that probably is most on the agenda today is the USMCA, US-Mexico-Canada Trade Agreement. We'll see if we can get that through the Congress. There are still some issues that we're working with members of Congress. I think the problem is timing.

Clemons: Thea, let me ask you the same question. Have you set the stage but from a slightly different perspective? You've worked a lot with labour workers, a different side concerned about environmental and labour standards. Is Donald Trump pushing the right buttons for your crowd?

Lee: Well, Donald Trump has clearly identified a problem that needed addressing, which is unfair trade, big trade deficits, outsourcing of jobs, corporations treating folks badly and moving jobs offshore. But I'm afraid that the solutions that he's put forward are too chaotic and they're not focused enough. They're not coherent enough to actually get the job done. So, he is addressing unfair trade with China, but doing so in such an erratic and unfocused way that it's not clear that either the Chinese government or US businesses know what they need to do differently in order to get past the tariffs.

Lee: He has renegotiated NAFTA, the North American Free Trade Agreement, and that was long overdue. He identified problems that had been festering for some time, but he has -

Clemons: Do you like where the USMCA is going?

Lee: I think there are some improvements in the USMCA, but there's a lot that needs to be done still, particularly with respect to enforcement and whether the commitments that have been made on labour are going to be enforced and enforceable or not. Whether they're sufficient. So, I think folks are looking at that and they're still negotiating on -

Clemons: So, you're sort of happy but not super happy.

Lee: Not super happy. Not ready.

Clemons: OK. But let me ask you this question, which I don't get about President Trump and trade right now. To a certain degree ... Someone found some notes that he had written where trade was mentioned and he scribbled on the sidelines, "Bad. Trade is bad." Do you think American workers and those that had been critics of trade deals in the past, particularly in the AFL and CIO and some of your other colleagues are in alignment with the president? Because when I hear that word trade is bad and I look at the volume of trade that the United States does, so right now in 2018, we had $3.1 trillion in exports, $2.5 trillion in imports. So whether you like trade or not, it's a huge number and a huge degree of jobs and capacity. The question is, is trade bad? Does that create an alignment with workers? Is there an understanding of how consequential that economic activity is for them?

Lee: I don't think most workers would say trade is bad. I don't think that's the right way of looking at it. I would say trade policy, US trade policy, has been misdirected. Has had the wrong priorities for a couple of decades now that we have put too much emphasis on corporate profits and mobility and flexibility and not enough emphasis on good jobs, on workers' rights, on environmental, on consumer protections, on democracy protections. So, I would say our trade policy has been misguided and has been flawed, but the year is 2019. Obviously, we are going to be in a global economy. Obviously, we're going to trade. Of course, workers benefit from exports as well as from imports. The question really is what kind of a global economy do we want to live in?

Lee: When we negotiate a trade agreement, whether it's a bilateral trade agreement or multilateral rules or whether we even decide how we're going to enforce our own trade rules, we are basically defining the terms of competition for the global economy. That's a super important question and it's one where we need to align with the rest of the world. We need to reach some common agreements that it's not okay to export goods made by prison or slave labour or child labour or by workers who don't have the right to organise a union. When we come to those agreements, whether it's through the international labour organisation or through multilateral environmental agreements, trade policy can reinforce those commitments we've made to each other in the global arena. That is important for the terms of country.

Clemons: Carla, you're a Republican. The president is a Republican. Who do you agree with more on trade today? The president or Lee?

Hills: Well, I would pick as a bouquet some from each. I think trade is enormously important. I think it's enormously important for workers. Just take our North American region. We have become the most competitive in the world. We have created 14 million jobs as a result of our opening up the market. Our exports have gone up and our supply chains have strengthened. It's been a win-win situation. Are there changes? At the very beginning, I thought that the North American Free Trade Agreement should be updated because so much has happened in the last 20 years. We didn't have digital trade. You didn't have a cellphone. You didn't have the kind of television that you're enjoying today.

So, we have to have rules to cover. It'll only be more rapid that the change occurs. Where I and Thea may disagree is I think that trade has been good for the workers, but we have been deficient in training them to deal with the change that is the technological change. That is, we are remiss in that. That is going to happen more rapidly. I used to go on the floor of an auto company. It looked like New York 5th Avenue at Christmas time. I mean, you could barely get through. Today, you go and it's quiet. There are three people in long smocks and buffers on their shoes. They tell you to walk in a straight line.

Clemons: Robots.

Hills: Absolutely.

Clemons: Automation.

Hills: It is all done electronically. We have seven million jobs in the United States that are unfilled, that are looking for trained workers. I'm not talking about a college degree. I'm talking about 25 weeks of training. We should be posting all the open jobs, the salaries, and providing a stipend to get you from where you lose your job to where there is a job that you want. Then a stipend for the 25 weeks. The company that needs you would pay you. It would pay for itself because you would pay more in taxes, kind of like the Marshall plan.

Clemons: We like big ideas here. Glassman, speaking of time before cellphones, you wrote an article 19 years ago that I found. It's a wonderful reminder of where the Republican Party and really, the United States, sort of was on trade. I want to read just a section. It's called, The Blessings of Free Trade. Was written in 1998. You were about four years old, I think. It starts, "Why do Americans trade with people in the rest of the world? The basic question seems to be lost today in the political debate over trade deficits, fast-track negotiating authority and the World Trade Organizations. Americans trade because doing so allows us to concentrate on what we do best thus raising productivity and incomes." You go on just to tell the story of what trade achieves and how it is at that time being pilloried.

I'm interested to know how you think the debate and challenges have changed 19 years after. Are we pretty much running around chasing the tails the same way?

Glassman: It's just a disaster. I think what you're seeing with this administration of all the things that it has done that had been criticised, I think its trade policy is probably the worst. Maybe immigration, it's kind of tough. But the president has a trade adviser who is a tremendous outlier, Peter Navarro. Very, very few trade economists would agree with his point of view, which essentially is that we have to have bilateral equality with everybody that we trade with. Which is an absurd proposition that was easily refuted by Adam Smith in 1776. I mean, one of the problems, as far as I'm concerned, with trade economics is almost everything's already been decided. It's already been done. This is actually not very hard.

We should be trading with the rest of the world. We should be trading at the lowest possible tariffs, probably zero tariffs. We need to understand that we trade not for exports. We trade for imports. We can't eat exports. This is a point that Milton Friedman made many, many, many years ago. We can see the consequences already. We're seeing the consequences of the president's policy. Declining manufacturing.

I would add one other thing. I think that trade is a basic human right. I think I have the right to exchange my labour, speaking of labour, and my whatever I produce with anybody I want anywhere in the world unless there's a national security issue involved. Otherwise, it's a freedom that I should be able to enjoy. Just like my freedom of speech, freedom of assembly, I should be able to exchange those products that I can produce. You better come up with a good reason for me not to be able to do that.

Lee: Yes, but when you trade, you do so under certain constraints and rules. There are rules around financial transactions, around intellectual property rights, around other things, honesty and so on. When we set the rules of the trading system, if we set them only for the convenience and the profits and multinational corporations -

Glassman: I'm not talking about multi. You always hear multinational, multinational. It's all I hear from labour. It's I'm an individual. I may work for a corporation. I may run a company. Whatever it is. I'm the one who's doing the production. I should be able to sell that to somebody in San Francisco or somebody -

Lee: But what if you use child labour in the production of it? What if you use them?

Glassman: That's a completely different issue. It has nothing to do with trade.

Clemons: If you're an innovator, Jim, on intellectual property, you're going to want to protect James Glassman's intellectual property rights.

Glassman: Absolutely, and I agree with that.

Clemons: I think part of the question, part of the tension we have today over China, and I think this is where President Trump has been applauded by many surprising trading partners of the United States on one hand - I've had a forum not too long ago where I had the ambassadors of France and Singapore and Canada, and in a way, they all said that what President Trump was doing with China that was engaged in lots of predatory trade practices that were creating complications on intellectual property and strategic targeting. I just wonder, do you think they are misplaced in applauding Trump on that or -?

Glassman: I think trade structures, trade agreements, and Carla is the expert on this, can be used to achieve other ends such as the protection of intellectual property rights, such as perhaps child labour, that sort of thing. Absolutely. But there are real serious consequences of that. Let me just tell you one. Okay? The president put national security - Using national security as an excuse, he put 25 percent tariffs on steel. So I'm an adviser to the largest nail manufacturer in the United States.

Clemons:  Like nails. Pounding nails?

Glassman: Yeah. They use steel. OK? They don't use any steel; they use very little steel from the United States because the United States doesn't make that kind of steel. So, this company's workers went from 500 to 300. The company almost went out of business. It took nine months to get an exemption from these tariffs. Obviously, that's sort of a political gift that's given. So, that's the problem. You can't do everything through trade because there are huge disruptions that occur as a result.

Clemons: Ambassador Hills.

Hills: I would say that the - your question was, is the administration correct in its analysis with China? I would say that its analysis is all right. There's no question that China has not given us national treatment and treated us in a nondiscriminatory fashion basic norms of the World Trade Organization that we were a leader in creating in 1995. Having said that, I think the prescription of correcting those ills was wrong because I think if we had joined hands with Europe, Japan, South Korea, Canada, and Mexico representing as a group more than 60 percent of global GDP, China would have listened very carefully. It would have been extraordinarily difficult for it to turn its back. I think we would have had a deal by dealing with it bilaterally. I think that we have fractured our opportunities for success.

Clemons: So, America has become a smaller player in global trade affairs, not a larger -

Glassman: I think bilateral is a real problem, as Carla has said.

Lee: I want to agree with Carla on that point.

Clemons: This is a rare moment. Historic.

Lee: I think building alliances is really important, particularly when we're dealing with China and with China's unfair trade practices around illegal subsidies, around violations of norms. Having like-minded countries working with us definitely would have made that more effective. Instead, what the Trump administration has done is it has alienated a lot of our allies in the trade front. So, I think that was mistaken. I think that was the wrong way to go.

Hills: Let me just say what the results are. As a result of our tit-for-tat tariffs, China has raised its tariffs against us 20 percent to 24 percent while it's reduced them to others. Before the debate started, we were all paying about 8 percent. It's reduced it down below 6 percent for everybody else, up for us. It's 24 percent. This doesn't make good economic sense.

Clemons: Thea, I found this great quote from you, I just want to highlight - the other day, apparently you spoke to the US-China Business Council - Lee said, "Trump is using that tool, tariffs, too haphazardly. In a way, he's not sending clear messages to either business communities or to trading partners." Lee said at the summit. She added, "He's burning -" Meaning you. "He's burning bridges with a lot of trading partners, which is going to cost us over the long run." I don't think I've ever heard a labour leader issue that kind of critique. I find it interesting that you find the practice of just throwing tariffs around; we heard Donald Trump has tweeted the word tariff 177 times. This is an obsession for him. It's a very central issue.

Lee: I think tariffs can be an effective tool. I think one thing that Donald Trump has demonstrated is that the US did have more leverage in the US-China relationship than we have admitted or used over the years. When we have such an imbalanced trade relationship with China, and I would say that's an important factor. Not to say that we have to have balanced trade with every partner, but the size and the level of imbalance of our relationship with China should tell us there's something wrong in that relationship, which is that the Chinese government is not playing by the rules. But that imbalanced relationship means that we actually have more leverage than the Chinese government does. We have used it. I wish we were using it to a more coherent purpose.

Clemons: Jim, we haven't talked much about American consumers. I did mention Christmas coming up, but apparently, he waived the sanctions on those toys and lights and trees coming from China. But are the American consumers being thrown under the bus right now?

Glassman: Yes. Consumers are number one. That's what policies should be directed toward, is helping the consumer. That is, we use the word "consumer", "American individuals", I think it's a better way to put it. Policies should be directed toward allowing people, individuals, to live a better life, a more prosperous, more meaningful life. Absolutely. That's number one. I think this president doesn't quite understand that except maybe for Christmas time. He's worried about either particular interest groups or this kind of gaming. "We have to win. We have to -" It's actually consumers who count. The blessings of trade are basically bestowed upon consumers.

Again, that's something that Adam Smith figured out. I mean, I am not a very good - I probably couldn't do my own dry cleaning. OK? So, I go to a dry cleaner to do it. I do other stuff and I pay the dry cleaner. I don't have to do everything. That's the same thing with the United States. We should be concentrating on what we do best. We don't have to do everything.

Clemons: In very short form, thank you. I would love you to prognosticate, to look ahead into your crystal balls and take a look at whether things are going to get dramatically better and we will move past this time or you're going to see deterioration and what the consequences of that are. I was just reading about the Smoot-Hawley tariffs and what they did. I've been interested in why we haven't seen a similar collapse in markets and confidence in the American economy. So, one question is, do you think things will get better? Carla, is this going to eventually hit the real economy of the United States in a way that it has not hit before yet?

Hills: Most economists say, "yes". They're very worried about what this is doing. We are not moving in a way to create greater opportunity. Thea mentioned leverage, that the tariffs give you leverage. I would say joining hands with like-minded nations gives you leverage. Knowing China, I would say that there is no way it could turn its back on an aggregate of 60 percent to 70 percent of global GDP. If they did, you'd say, "Well, we're going to use the nullification and impairment clause in the World Trade"

Clemons: That's a whole another show.

Hills: "Oh, in the World Trade Organization and you're out and you'll pay high tariffs. You won't get the WTO benefits." Believe me, we would have had a good solution. It was a magic moment because China's economy was softening. They're moving from an export-heavy industry down to a supply and consumer economy. It could have been a win-win for them and for us.

Clemons: Thank you. Thea.

Lee: Well, I think it depends what we do next. I don't expect much more from this administration. I would just point out that consumers are important, but consumers are also workers. If they don't have money in their pockets, they can't be good consumers. A lot of the benefits of the kind of trade policy that we've done have not really gone to consumers. They've gone in profit margins to the big retailers and importers and multinationals. So, I think we have a chance to remake our trade policy in a way that is in global solidarity with workers in other countries lifting up workers rights. Dealing with climate change, the pressures of climate change. Figuring out how we're going to deal with international tax policy so that we can afford to invest in infrastructure and skills in this country and in social-

Clemons: But bottom line is: So far you agree with Glassman that things are fragile.

Lee: Things are very fragile at this moment.

Glassman: Very fragile. I think we're already feeling it. I mean, this economy will be growing at least a half a percentage point greater than it is right now. It's going to get - if this continues, it's going to get a lot worse. There's no doubt about it.

Clemons: Thank you. I'd like to thank you all for being with us. Ambassador Carla Hills, former US trade representative and CEO of Hills and Company. Thea Lee, president of the Economic Policy Institute. Ambassador James Glassman, author and consultant, former undersecretary of state. Great to be with all of you.

So what is the bottom line? Trump has been shelling out dozens of billions of dollars to farmers. He's embraced tariffs and he shoots them at friends and foes. Workers be damned. Consumers be damned. We don't know how this story will end, but we do know that Trump is obsessed with winning in trade and everything else. He might want to turn the United States into an even bigger export powerhouse than it is, but he has no strategy to get there. He can wreck his system, but he hasn't been able to build a better one yet. That's the bottom line.

Source: Al Jazeera