As President Donald Trump promises to put “America first,” Mexico and China are scheming to team up in order to build cheap cars to compete with American-manufactured vehicles in Latin America.
Additionally, Mexico is weighing allowing Brazil and Argentina duty-free imports of corn, a potential move that could slam the U.S. corn market, which supplies more than 95 percent of Mexico’s corn demand.
“It stems from the really inexcusable hold-up of the Lighthizer nomination.”
While all this scheming develops, Trump’s team at the Office of the U.S. Trade Representative is woefully empty and ill-prepared to fight back — thanks to confirmation obstruction from Senate Democrats. The Office of the U.S. Trade Representative, a building just a stone’s throw from the White House, is even missing someone at its top desk. Trump’s nomination of Ohio’s Robert Lighthizer to be U.S. trade representative is currently stuck in limbo.
According to a senior administration official who spoke to LifeZette, there are supposed to be two deputy U.S. trade representatives based in Washington, D.C. There is supposed to be a total of four high-ranking officials exclusively tasked with helping Trump defend and manage trade policy.
As it is, the office is effectively sidelined, thus giving more control to officials at the State Department and other government agencies, where the trade expertise may not be as sharp, or as timely, according to the senior official.
The absence of a strong USTR team could also be contributing to disunity in the administration over a vision for implementing the president’s trade agenda.
The competing corners of power within the White House are a concern for Kevin L. Kearns, president of the U.S. Business and Industry Council.
“The trade situation is a mess,”Kearns told LifeZette. “It is certainly as complicated as health care … The president has to take charge here.”
Kearns said the U.S. has kept its markets open while many other nations have protected their markets, creating a $500 billion trade deficit.
“Our nation needs an industrial strategy,” said Kearns. “There’s just window-dressing going on.”
While the administration has its trade policy hand tied behind its back, Carlos Slim’s Giant Motors will begin manufacturing cars in Mexico to sell to Latin America in a joint venture with China’s JAC Motors, according to the Financial Times.
The Financial Times reports the $230 million investment comes as uncertainty over NAFTA puts pressure on Mexico “to diversify its imports and exports away from its current dependence on the United States.”
The move also shows China is making a bet on Mexico as an assembly hub for exports to the rest of Latin America, the Financial Times reported.
Also of concern is just how much the State Department knows or cares about Trump’s trade policies regarding China and Mexico.
Visiting Chinese officials in Beijing on March 19, Secretary of State Rex Tillerson made no serious mention of trade criticism, instead pledging “non-conflict, non-confrontation, mutual respect, and win-win cooperation.”
That concerned Alan Tonelson, an economic analyst and the founder of the RealityChek blog, which supports tougher stances on trade policy.
Tonelson said adjustments to NAFTA are important because non-NAFTA nations (nations outside of North America), have been using Mexico to get around standards for manufactured products.
Under NAFTA rules, the signatory nations set high content standards for NAFTA-made products, Tonelson said. If enough of the product is made in the North American nations, it avoids duties.
But the penalties are weak, Tonelson said, and have attracted European nations to set up shop in Mexico to manufacture goods to be sold in NAFTA nations. Some of these products have a goodly amount of parts made in Europe or other places outside of the treaty, Tonelson said.
“To me, the most important news is Trump wants to change the NAFTA rules or origin,” Tonelson told LifeZette. “It means all manufactured products have to be made primarily in North America to be traded duty-free.”
Tonelson said correcting that would put a crimp in Slim’s plans to build cars with China, even if they focus on the non-NAFTA nations in Latin America. Tonelson said he doesn’t see much a market in Latin America.
But Trump needs a team in place at his trade offices to affect such changes in NAFTA policy. He doesn’t have it yet, and Mexico and China may be taking advantage.
“That’s a huge problem,” said Tonelson. “It stems from the really inexcusable hold-up of the Lighthizer nomination.”