Former USTR Negotiator Says Lists 3 and 4 of China Tariffs Provide 'Diminishing Returns'
Wendy Cutler, former acting deputy U.S. trade representative, says that the first bucket of Section 301 tariffs, the ones tailored to Made in China 2025, worked. Even though Cutler is generally not a fan of tariffs, she said, "I think those succeeded … in getting China to negotiate in earnest."
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Cutler, who was speaking Sept. 5 at the Asia Society in New York and now is a vice president of the Asia Society Policy Institute, said the breakdown in talks that happened in May is pretty standard for trade negotiations. Trade negotiations are always full of drama, she said, but what's different here is how unempowered staff is to negotiate and how much Donald Trump talks about what's happening at the table. In Cutler's experience -- she was head negotiator for the Trans Pacific Partnership -- "the quieter [talks] are, the better they go. Particularly with Asian countries, where saving face is so important."
Cutler said if the other country's politicians don't think a trade deal has some wins for them, they will not implement it. "I’ve been across the table from countries that did not want to be negotiating with the United States," she said. Even as talks proceed, she believes others in the government are "working on how they’re not going to live up to the agreement, or circumvent it." She worries, because, she said, "I don’t think win-win is in the president’s vocabulary."
Still, even as she's less optimistic than she was, she said, "I continue to believe that a negotiated solution to these issues is possible."
But she thinks both sides need to take actions that benefit the other country first. She said if China started buying more agricultural products, and chose not to impose higher tariffs on U.S.-made cars or car parts, that would help. If the U.S. would approve some licenses for sales to Huawei, and not increase 25 percent tariffs to 30 percent on Oct. 1, that would help. "I think if you could kind of establish a better atmosphere then the two sides could ... find out how to get back to that [May] text."
Cutler said there's no way to know whether Trump will increase tariffs on the last bucket of goods in December, or delay the 5 percentage point increase on List 3, or hike tariffs more if he's unhappy with the progress of talks. Both the Chinese and the U.S. misread each other, and even now, both sides are trying to figure out if each has more leverage, she said.