SCOTUS delivered a blow to Trump’s tariffs. How other countries might view the defeat : NPR

STEVE INSKEEP, HOST:

Mike Froman listened to us. He was the US Trade Representative during the Obama administration. Welcome back to the program.

MIKE FROMAN: Hello.

INSKEEP: Did the president just lose a lot of leverage in the negotiations?

FROMAN: Well, I think it does – it has more complex processes to follow, but it still has a lot of authority, and the court has recognized it under other provisions of the law to impose tariffs on other countries. So even if the tariffs – when you lower them – the tariffs that the Americans were facing were about 16% before this decision. Immediately after, it was around 9%. And with the new rate, that goes back to about 13.7%. So it’s not that different than before, and he has provisions under laws called Section 301 or Section 232 that he can put in place over the next few months to raise tariffs again against other countries. He therefore still has a certain power of influence, but it is more difficult for him to make a decision at 10 a.m. and impose it in the afternoon. He has to go through a certain process to get there.

INSKEEP: That means you have to prove that there is a valid concern in the United States that would justify increasing taxes on people who import products?

FROMAN: Yes. But when you look at these other procedures and say this is a matter of national security or an unfair trade practice, the U.S. Trade Representative, the Department of Commerce, has a certain degree of discretion in how to implement these laws.

INSKEEP: Are there any situations where the president wouldn’t be able to recreate last year’s rates at all?

FROMAN: I think the main result of this is that the president won’t be able to use tariffs as easily outside the trade zone, outside the economic zone. You know, when he imposed 50% tariffs on Brazil for the way it treated former President Bolsonaro or when he threatened to impose tariffs on a handful of European countries that sent military forces to Greenland in solidarity, those are tariffs that you can’t impose under Section 232 or Section 301. They’re not trade-related, and he’s going to have to find other ways to demonstrate his dissatisfaction with other countries than using the tariff tool.

INSKEEP: What do you think about the situation in other countries – Indonesia comes to mind – where last week Indonesia reached a deal with the United States? They gave all kinds of tariff concessions, lowered their own trade barriers for American goods going to Indonesia, in order to get some tariff relief, and now it turns out they could have gotten it for free because the tariffs that were threatened against them were overturned by the Supreme Court. What would you do in this situation?

FROMAN: Well, first of all, I don’t think the tariffs are really eliminated because he has this 15% tariff.

INSKEEP: That’s right.

FROMAN: We don’t know if it’s 10 or 15%. In the press conference and in the executive order it’s 10%, but on Saturday he tweeted 15%. He can put this in place for 150 days, or about five months, during which time he can use his other trade authorities to increase tariffs if he wants. My guess is that most countries will not want to follow President Trump’s wrath by abrogating old agreements or trying to renegotiate the agreements they currently have with the United States. They’re going to wait to see how he proceeds with these other trade authorities and then adjust accordingly.

But at this point, I think – you know, one thing I found interesting – and Asia is an interesting example – that countries in that region care a little less about the overall tariffs that they face in the United States than they do about the relative tariff compared to their neighbors, so Malaysia is very concerned about them not being higher than Vietnam, because that’s who they saw as their competition in terms of exporting to the United States. But I imagine countries will continue to want to sort of maintain, ease any tension with the United States and wait to see what happens over time.

INSKEEP: I want to ask briefly about another aspect of this, which is about Europe and free trade. As the United States continues to attempt to erect trade barriers with the rest of the world, Europeans are looking to Asian countries to expand and strengthen free trade agreements. I ask you this question because when you were a U.S. trade representative, you tried to establish the Trans-Pacific Partnership, connecting the United States with a group of Asian countries. This proposal was ultimately rejected by Trump. Many Democrats did not like this decision either, and the United States withdrew. Is Europe about to supplant the United States as a proponent of free trade?

FROMAN: Well, in many ways, they could. They have just signed agreements with Mercosur, a South American trade bloc. They signed a trade deal with India, which had been in negotiation for about 20 years. And as you said, they are now discussing the successor to the TPP, called CPTPP, which continues to exist, which the UK has already joined and which Europe is now discussing some sort of relationship with. So, yes, there could be a new trading bloc including much of the Asia-Pacific region, the UK and potentially even the EU in the future.

INSKEEP: And not in the United States. Mike Froman….

FROMAN: And not the United States.

INSKEEP: …is a former U.S. trade representative, now president of the Council on Foreign Relations. Thank you so much.

FROMAN: Thank you for inviting me.

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