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Here’s why Trump softened his tone on trade during the State of the Union

David Brancaccio Jan 31, 2018
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President Donald Trump smiles after arriving to give the State of the Union address in the chamber of the U.S. House of Representatives in Washington, D.C. on Tuesday night. WIN MCNAMEE/AFP/Getty Images

Here’s why Trump softened his tone on trade during the State of the Union

David Brancaccio Jan 31, 2018
President Donald Trump smiles after arriving to give the State of the Union address in the chamber of the U.S. House of Representatives in Washington, D.C. on Tuesday night. WIN MCNAMEE/AFP/Getty Images
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President Donald Trump’s trade rhetoric during his State of the Union speech last night wasn’t as heated as you might have expected. 

While he took a hard line on issues like immigration (he said we have a broken system where single immigrants can bring “virtually unlimited numbers of distant relatives”), his tone toward trade was a bit more muted compared to previous statements he’s made on the subject.  

“The era of economic surrender is totally over. From now on, we expect trading relationships to be fair and, very importantly, reciprocal,” Trump said at one point. Compare that to this statement from his inauguration speech last year: “We must protect our borders from the ravages of other countries making our products, stealing our companies and destroying our jobs.” 

For some context on the State of Union when it comes to our economic relations with the rest of the world, we talked with Ian Bremmer, the founder of Eurasia Group — a global political risk consultancy. Below is an edited transcript. 

David Brancaccio: So on the specific subject of trade last night, what did you hear? I mean, to me, the rhetoric wasn’t really rowdy on that subject.

Ian Bremmer: Yes, not dire, certainly not the inauguration speech that we heard a year ago, but took a couple of significant whacks at China. And given that that’s the most important trade relationship for the United States in the world, I think that matters a lot, especially on intellectual property. That is the issue the Chinese are most concerned about in terms of the potential for this to escalate.

Brancaccio: So it was a choice to adopt the tone. Do you think it’s actually a shift, somehow, in policy — this restrained tone on trade? Many of the world’s business and political leaders met with or saw the president in Switzerland at Davos last week. Do you think they got to him? 

Bremmer: The president doesn’t tend to take in information that doesn’t validate his preexisting views, with the exception of information about the markets. He does view the markets as a real sort of objective indicator. And he’s been hearing from a lot of people that if he takes the steps against NAFTA that he’s been planning, that that’s going to have a significant negative impact on all these records that have been broken in the Dow that he keeps touting everyday. And I do think that that has softened him a bit. But as we know, Teleprompter Trump is not Twitter Trump. These are written by other people, and his ability to to shift on a dime when he gets agitated about something is pretty hot.

Brancaccio: Teleprompter President Trump said that he’s turned the page on unfair trade deals. He did say that. It’s also been noted, though, that the trade deficit with China — the U.S. trade deficit — is up about 10 percent since Mr. Trump took office.

Bremmer: Yeah, I think if you recognize that China is the focus now for the president, and has been for a few months, and that some of the most concerning trajectory is about North Korea where Trump has said the Chinese have to help us or else,  and if they don’t then I’m going to hit them on trade. The fact that the North Korean environment seems to be getting worse — you saw outside the State of the Union by far the most important news out of Washington yesterday was that America’s expected ambassador to South Korea, Victor Cha, was taken out of that position because he’s concerned about the possibility of a preemptive strike and the White House didn’t like his criticism on that. That implies that the U.S.-China relationship, economically, is poised to become considerably more tense than it was over the first year. 

 

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