As hundreds of business leaders flood Washington, D.C. to voice their concerns about the administration’s plan to levy additional tariffs on Chinese imports, one of President Trump’s strongest allies in the business community is projecting cautious optimism about the president’s strategy.
“They [China] are coming to the table, they are at the table today. Our hope is the strategy that the imposition of the tariffs would bring them to the table. We’ll have to see how this plays out,” Jay Timmons, the president of the National Association of Manufacturers, told the Washington Examiner. “Clearly, we have China at the table. Clearly, the administration is ready to hold China accountable for their trade abuses.”
After a two-month standstill, mid-level U.S. Treasury Department and Chinese officials kicked off two days of trade negotiations Wednesday. Previous negotiations have, thus far, produced little progress. Instead, they have given way to tit-for-tat escalation of tariffs between China and the U.S. and produced no commitment from China to halt unfair trade practices. This week’s talks are not expected to produce a final agreement, either.
[More: ‘Point of no return’ draws closer in U.S.-China trade standoff]
Two major factors hang over the discussions. The first is the Trump administration’s commitment to levy additional tariffs on $200 billion worth of Chinese imports. The other more pressing factor is the 25 percent tariffs both nations are planning to impose Thursday on $16 billion worth of each other’s exports.
The president said Monday he does “not expect much” to come of these talks, adding that he sees “no timeframe” and has “a long horizon” before he would need to strike a deal.
Those within the Trump orbit claim the president’s tariffs are purely a strategy to bring foreign partners, specifically China, to the negotiating table. In other words, the president is using tariffs (and the threat of future tariffs) as a way to engage foreign trading partners, bring them close, squeeze out demands that are more favorable to American businesses and, ultimately, reach a deal.
Trump has found few supporters in or outside of the business world quite like the NAM — a group that represents upwards of 14 million manufacturing workers nationwide. The group has worked extensively with the administration, helping advise the White House with tax and regulatory reform. They’ve also been politically active.
Timmons, along with NAM’s chairman and CEO of Emerson, David Farr, worked hand-in-hand with the administration during the creation and roll out of tax reform last year. Farr was, notably, one of the first Fortune 500 CEOs to back the president during his 2016 presidential campaign bid.
Since Tax Day, the group has run stories selling the benefits tax reform has had on manufacturing. NAM hasn’t shied away from getting involved in the 2018 midterms, either. The group has run targeted digital ads detailing how tax reform is benefiting the nation in battleground states, like Pennsylvania, Ohio, Wisconsin, Michigan, Georgia, Florida, and others.
While the group remains steadfast supporters of the administration’s economic agenda, they are not fans of tariffs.
There is increasing fear in the business world that both nations are far from renegotiating longstanding trade agreements between both nations that are more amicable to U.S. businesses.
Thus far, U.S. businesses — from manufacturers (including NAM members) to clothing producers to electronic companies — have filed in excess of 1,300 comments in response to the new tariffs with the U.S. Trade Representative. The majority of those comments are opposing the plan.
Timmons isn’t as quick to judge this week’s discussions as some. He believes the president is trying to avoid negotiating in public and is hopeful that the administration will be able to stop Chinese trade abuses.
“I would like to give the administration at least today to see what kind of progress we are able to make on China’s abuses. If we are able to get them to understand that in a international system, they can’t abuse this system if they want to continue trading,” Timmons told the Washington Examiner. “I think we have to look at this through a lens of positive intent.”
The ultimate goal for manufacturers is to level international playing field to make American businesses more competitive. Timmons said NAM has spent the past 20 years pressing previous administrations to address China’s trade abuses. With the Trump administration, the group has already accomplished two of their three big priorities — tax and regulatory reform.
“Our end goal here is that China is no longer able to cheat. That we have a rules based trade agreement with China that is enforceable. That is what we communicated with the White House,” Timmons said. “We don’t like tariffs, but if your end goal is to hold China accountable … We have an administration that is laser focused on manufacturing and on many issues we agree: taxes, regulation.”
Few sectors have benefited more from the tax bill than manufacturing. The manufacturing sector created 327,000 new jobs over the past year — the best 12-month stretch in 23 years. American manufacturers are reporting record levels of confidence in the economy and potential for future growth.
NAM, like the administration, has a number of grievances with the way China does business. Timmons named a few of them in his conversation with the Washington Examiner, like intellectual property theft, counterfeit products, steel dumping, unfair labor practices and artificial trade barriers.
For these reasons and others, like the size of the Chinese economy, Timmons says that any international trade agreement that promotes free and fair trade must include China. He says China is “playing the long game” and ultimately wants to “put American businesses out of work.”
Like others within the business world, Timmons is clear to make the point that he is no fan of tariffs, as he has done in multiple public statements and appearances on television.
“Tariffs are harmful. They are harmful to manufacturers. They are negative for inputs,” Timmons told the Washington Examiner. “1929 proves that trade wars are devastating for everyone. The question is what is the price right now that China is paying as these tariffs are imposed. They have a huge population base and a huge potential consumer base. These types of actions, we have to see what the harm is there.”
If the U.S. decides to go forward with the additional $200 billion worth of tariffs on Chines goods and China retaliates with its $60 billion of planned retaliatory tariffs, China’s economic growth is expected to fall 0.2 percent in 2018 and 0.3 percent in 2019.
For their part, U.S. business leaders have spent the week testifying before the USTR about the perceived ills they expect for their business and American consumers if the administration continues to levy tariffs on China and other trading partners.
At the end of the day, Timmons says he understands that this is the strategy the administration has decided to employ.
“Is it exactly what we would have done? No,” Timmons told the Washington Examiner. Still, he says he and NAM members are incredibly happy with the progress this administration has made with tax relief and growing the economy.
Timmons said the key now is to use this moment to solutions to the problems we have with China.
“Americans can compete on any playing field as long as we aren’t being disadvantaged by the actions of other governments. We have the products that people not only here but around the world want to buy. We know have a tax and regularity system that allows us to compete. We can’t do that if don’t have the same market access, or stealing our intellectual property or counterfeit products,” Timmons told the Washington Examiner.
