President Trump, author of the Art of the Deal, famously loves to negotiate and renegotiate. During the campaign, we heard endlessly his promises to renegotiate various treaties and agreements, including the Iran deal and the North American Free Trade Agreement.
The president is also extraordinarily competitive and obsessed with winning. He makes this evident by continuing to bring up his November 2016 election victory, and his earlier primary victories, at every opportunity, even a year or more later.
A desire to win and experience in negotiation can both be excellent traits for a president. But the White House's NAFTA renegotiations suggest a problem. The president wrongly sees international trade as a zero-sum game and appears dead set on America winning by defeating Mexico and Canada.
The president and his officials are too prone to seeing the nations with whom we trade as enemies who must be vanquished, when in truth they are commercial partners with whom we have mutually beneficial exchange relations. The skewed White House view is clear in some of its demands, such as that a tariff should be imposed on any car with less than 50 percent American content.
What would this achieve other than the president's psychic satisfaction in trumpeting the fact that Mexico and Canada are the junior partners in NAFTA? This doesn't seem worth the continental disruption that the demanded tariff would cause to the auto industry.
Here's why. Protectionism on automobiles is largely nostalgia, and it's costly nostalgia. Trump's desired content requirement won't bring more jobs back to Detroit. It may send more jobs out of America as carmakers decide it's cheaper to make the whole thing south of the border and let the U.S. slap a tariff on Mexican-made Fords and Jeeps.
Some of the Trump administration's demands are salutary, such as trying to get Mexico and Canada to cut their state-owned enterprises. But that's not asking these economies to take second-place to us. It's asking them to shed inefficient distortions created for political rather than economic purposes. This is what trade deals ought to be about. Removing barriers and distortions allows all sides of a trade agreement to grow and prosper.
This idea, that we all benefit when we all get along, may sound too Kumbaya for Trump. This probability is revealed in Art of the Deal when the author writes about gambling mogul Steve Wynn's effort to take over Hilton Hotels. Trump's description of himself in this passage is telling:
"I'm not saying I would also have won," were he in Hilton's shoes, Trump wrote, "but if I went down, it would have been kicking and screaming. I would have closed the hotel and let it rot. That's just my makeup. I fight when I feel I'm getting screwed, even if it's costly and difficult and highly risky."
Trump clearly thinks America got the short end of NAFTA. Some of his negotiators seem willing to go kicking and screaming if they don't get their demands. But they wouldn't just be taking a family-owned company with them. They'd be taking the country.
Free trade is win-win. Or in the case of NAFTA, win-win-win. There's no need to insist that the other guy must lose.