Trump turns trade into bargaining chip

President Trump is increasingly using trade as a point of leverage to win concessions on national security and foreign affairs.

Trump in July suggested he would unwind access to the U.S. market for China if it did not do more to pressure North Korea, asking on Twitter, “Why should we continue these deals with countries that do not help us?” 

{mosads}On Sunday, he floated the possibility that the U.S. could end trade with any country doing business with North Korea, a threat that would cover China and Germany. 

Trump also is considering a withdrawal from a free trade agreement negotiated by the George W. Bush administration with South Korea, a move the president has previously blamed on a steep trade deficit, but which comes as he presses Seoul to take a tougher line with North Korea.

Mexico is yet another target. Trump suggested the U.S. could withdraw from the North American Free Trade Agreement (NAFTA) with Mexico and Canada if Mexico does not pay for a border wall.

Many see Trump’s use of trade deals as a cudgel in foreign policy negotiations as a dicey strategy.

Previous administrations have historically kept trade negotiations like NAFTA segregated from other geopolitical issues. 

Some outside analysts deny there is a strategy, arguing instead that Trump’s get-tough trade tweets are a signal to his base — to whom he campaigned on promises of both tighter national security and more advantageous trade deals.

“That’s mostly about messaging to the base, it’s not a strategy about messaging to the countries,” said James Carafano, a member of the Trump transition team who heads the national security policy team at the Heritage Foundation. “If he does connect them, it’s really more for domestic consumption.”

Still, Trump’s linking of trade to other issues has been noticed with some wariness by U.S. allies.

“The risk with Trump is that he will link economic issues with security,” one Japanese source told Reuters last week. “The victim at the moment is China, but there is no guarantee that Japan will not be among the victims.”

Republican analysts say that tying trade to security issues is a natural posture for the former real estate mogul, who cut his teeth in the world of international business. But it’s unclear whether applying economic leverage will get the policy result the president wants. 

China, for example, has the tools to put pressure on North Korea. The country has long been the North’s major food and fuel provider — but Beijing worries about pushing Kim Jong Un’s government to the point of collapse, eliminating what China sees as an important buffer between itself and the U.S.-allied South Korea. It’s unclear whether the threat of a more adverse trade relationship with the United States would outweigh those concerns. 

The president’s suggestion that the U.S. would cut off trade with countries that deal with North Korea was widely treated as infeasible, given the importance of many of those countries to the American economy. 

China is America’s second-largest trading partner, after Canada, and has exported $229 billion in goods to the United States this year. It also owns about $1.1 trillion in U.S. debt, though it has reduced its position in recent years.

Germany both buys a lot of U.S. exports and invests a large amount of money in the United States. 

In Mexico, linking NAFTA to the wall “gets him nowhere,” Carafano said. Few serious analysts believe that Mexico will pay for the border wall, as Trump promised during the campaign — but continuing to hammer the issue could damage sensitive renegotiation efforts on NAFTA. 

“It may work in real estate, it don’t work in international politics,” said Gordon Adams, who oversaw national security budgets at the Office of Management and Budget during former President Clinton’s administration.

Some analysts pushed back against the notion that the same negotiating principle was at play with Mexico and China. In the case of China and North Korea, the president’s clear intention was to put pressure on Beijing to rein in Pyongyang — but by linking  trade with Mexico and the border wall, the president may have been merely playing to his core supporters. 

“While the president may frame this in national security concerns, it is ultimately about appealing to his nativist base — his group of core supporters,” said Christopher Swift, a former official with the Treasury Department’s Office of Foreign Assets Control and a current national security professor at Georgetown University.

“For that base, NAFTA is emblematic of all the same problems that the border wall would fix,” Swift said, such as “the loss of American jobs and the decline of the American middle class and the influx of non-English-speaking immigrants from Latin America.”

The president’s frustration with the South Korean trade deal, meanwhile, appears to be divorced from national security concerns. 

In July, U.S. Trade Representative Robert Lighthizer said that since 2012, the U.S. trade deficit with South Korea had doubled from $13.2 billion to $27.6 billion, while U.S. goods exports have gone down. 

Trump, who has long expressed a deep antipathy toward countries with which the U.S. has a trade deficit, called it “a horrible deal” that has left America “destroyed,” in a Washington Post interview in April. 

His desire to pull out of the agreement comes at a time when military tensions on the peninsula are as high as they have been in years. The president’s national security advisers are reportedly urging him not to distance the U.S. from Seoul during the crisis over North Korea’s nuclear weapons program.

The Korea Times is warning its trade representatives not to cave to U.S. demands, arguing in an editorial that the crisis “should be no reason for Seoul to put its economic interests far behind security matters, weakening its bargaining leverage and playing into the hands of the U.S. leader, the self-styled ‘artist of the deal.’ ”