Kudlow warns WTO won’t determine US policy as summit nears

The president’s top economic adviser on Wednesday implied that the U.S. may not abide by any rulings from the World Trade Organization (WTO), a tough signal ahead of a Group of Seven summit this weekend where Trump is expected to face a backlash from allied leaders over his protectionist trade agenda.

“International, multilateral organizations are not going to determine American policy,” White House National Economic Council Director Larry Kudlow told reporters at a press briefing organized to preview President Trump’s trip to Canada for the G-7.

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The comments paint an unyielding stance on trade as the president prepares to meet with leaders from Canada, the United Kingdom, France, Germany, Italy and Japan. 

The meetings are sure to be tense. Trump imposed tariffs of 25 percent on steel and 10 percent on aluminum from all six countries, sparking a major backlash.

Ahead of the summit, the WTO circulated formal complaints from Canada and the European Union against the tariffs.

The EU said its retaliatory tariffs on $3.3 billion worth of U.S. goods would be ready in July, while Canada has approved its own list of counter-tariffs. Mexico, another country hit by Trump’s tariffs, has also announced a retaliation list on U.S. goods.

If the WTO rules against the U.S., the EU is preparing billions more in tariffs to place on U.S. goods.

Kudlow took a defiant tone with the Geneva-based organization, saying that while the Trump administration remains interested in the WTO and is working to resolve some of its trade disputes through the organization, its rulings would not determine U.S. policies.

“We are bound by the national interest here, more than anything else,” Kudlow said, painting an uncompromising stance ahead of Trump’s bilateral talks with Canadian Prime Minister Justin Trudeau and French President Emmanuel Macron. 

Leaders from all six countries have loudly complained about the tariffs, both in terms of their economic impact and the unusually aggressive stance Trump is taking with America’s closest allies.

Last weekend, when finance ministers and central bankers from G-7 countries met to lay the groundwork for the summit, the non-U.S. members issued an unusually pointed statement rebuking the U.S. The statement expressed “unanimous concern and disappointment” at the tariffs, which the statement said “undermine open trade and confidence in the global economy.”

Since then, British Prime Minister Theresa May called Trump’s tariffs “unjustified” and Trudeau said the national security rationale for imposing them was “insulting and unacceptable.” A call between Trump and Macron was “terrible,” according to a CNN report.

Far from backing away from the tariffs, Trump may consider threatening new trade barriers at the meeting, according to The Washington Post. He is in the process of evaluating steep tariffs on automobiles under Section 232 of the trade law, the same approach he took for the aluminum and steel tariffs. Section 232 allows the president to put tariffs in place for national security concerns.

In the press conference on Wednesdasy, Kudlow painted a rosy picture for Trump’s prospects of working out problems with American allies this weekend. 

“I regard this as much like a family quarrel,” Kudlow said. “The meetings will produce stuff.”

But the strategy could backfire. Trump has made the economy his signature issue, and analysts say that if Trump fails to secure better deals through his aggressive trade actions, the American economy will suffer.

A study by the Coalition of American Metal Manufacturers and Users released Wednesday calculated that the combination of U.S. tariffs, foreign retaliation and self-imposed quotas from allies Trump has struck trade deals with would lop 0.2 percent off American gross domestic product each year and eliminate more than 400,000 jobs.

Kudlow, a former CNBC commentator who had frequently criticized tariffs before joining the White House, vigorously defended Trump’s trade actions on Wednesday, insisting that he was the “strongest trade reformer of the last 20 years.”

The system of global trade the U.S. helped build in the aftermath of World War II, he said, was a “mess” that had “broken down.” 

“Don’t blame Trump. Blame the nations that have broken away from those conditions,” he said. “That system has broken for the last 20 years plus.”

Critics of Trump’s trade policies fret that the president is undermining the very system on which America and the global economy rely.

In terms of ongoing trade negotiations with China, which Trump is threatening with $50 billion worth of tariffs, Kudlow said that “both sides” had not agreed to a path for Chinese telecoms firm ZTE to restart U.S. operations.

The Commerce Department had banned ZTE from being U.S. components because the company violated sanctions, selling parts to North Korea and Iran. 

Updated at 4:06 p.m.