Japan Prime Minister Shinzo Abe returned home this week with little progress to claim in trade negotiations with President Donald Trump.
On the surface, the pair got on well over two days of discussions at Trump's Mar-a-Lago estate in Florida. They played 18 holes of golf on the same team (and won), donned almost identical ties at one meeting, and traded jokes -- Abe poked fun at how much Americans ate. He also won Trump's support for securing the return of Japanese citizens abducted by North Korea.
But on trade -- an issue Trump has used to reward the U.S.' closest allies -- their differences appeared more entrenched than ever. The president criticized Japan both on Twitter and at a joint news briefing with Abe, who failed to win an exemption from U.S. tariffs on metals.
Citing national security concerns, the Trump administration in March placed new tariffs on steel and aluminum exports from China and a number of other countries including Japan. China responded with import taxes of its own on U.S. goods. Abe also failed to persuade Trump to rejoin the Trans-Pacific Partnership trade deal.
The first day of talks between Abe and Trump began with the usual show of hand-holding and mutual compliments. But the session on trade and economic issues quickly turned tense and tough, according to two U.S. officials, as the leaders found themselves at an impasse on the tariffs. Trump refused to budge on his opposition to the Trans-Pacific Partnership, from which he withdrew the U.S. last year. The officials spoke on condition of anonymity to describe the private talks.
Trump had surprised Abe with a tweet ahead of talks focused on trade. The president wrote that he didn't like the Trans-Pacific Partnership regional deal, instead favoring bilateral talks.
"I am aware that the U.S. is interested in a bilateral deal," Abe told reporters. "But we want to approach the discussions from the point of view that the TPP is best for both of the countries."
When asked why Japan wasn't exempted from steel and aluminum tariffs, Trump repeatedly alluded to the U.S. trade deficit with Japan and barriers to U.S. exports. For his part, Abe reiterated that the metal shipments posed no threat to U.S. national security and he'd continue to seek an exception.
TARIFFS COST JOBS
Trump may hope his tariffs on imported steel and aluminum will create jobs, or at least protect existing ones, but researchers at the Federal Reserve Bank of New York said the opposite outcome is more likely.
"The new tariffs are likely to lead to a net loss in U.S. employment, at least in the short to medium run," Mary Amiti, Sebastian Heise, and Noah Kwicklis wrote in a blog post Thursday on the Fed bank's website. "Although it is difficult to say exactly how many jobs will be affected, given the history of protecting industries with import tariffs, we can conclude that the 25 percent steel tariff is likely to cost more jobs than it saves."
The post followed a warning on Wednesday in the Fed's Beige Book report that trade concerns were clouding an otherwise positive outlook. The Beige Book -- which is based on anecdotal information collected by the Fed district banks in March and early April -- cited one unnamed company in the Boston Fed's region as saying that "these tariffs are now killing high-paying American manufacturing jobs and businesses."
The New York Fed trio cited a 2003 paper by Trade Partnership Worldwide LLC, a Washington-based consulting firm that advocates on behalf of various industry groups, which concluded the effects of similar tariffs imposed by President George W. Bush in 2002 led to the loss of 200,000 jobs across the U.S. labor market. That number was bigger than the total head count of U.S. steel producers at the time.
"U.S. exporters that need steel or steel-related inputs will face higher input costs and will have to either increase export prices or reduce their profit margins," the New York Fed researchers wrote. "These effects could lead to lower employment in these steel-intensive industries and possibly plant shutdowns."
Russia on Thursday joined the European Union, India and China in demanding compensation from the United States for its tariffs on foreign steel and aluminum.
The World Trade Organization's website posted a filing from Russia that, like other countries, argues that the tariffs that took effect March 23 amount to a "safeguard" measure aimed to protect U.S. domestic producers from surging imports.
The Trump administration has rejected those arguments and says the measures are for national security reasons.
It is unclear, however, what Russia's move means in practice. It did not go so far as to appeal to the WTO's dispute settlement process over the tariffs. Under WTO rules, the only way to find out whether Russia is entitled to compensation is by initiating a dispute on the issue. Russia has never issued a WTO dispute complaint against the U.S. since Russia joined the trade body in 2012.
So far, China is the only country that has done so over the blanket tariffs on imports of the metals, though India has asked to sit in on its talks with the United States on the issue.
Longtime U.S. allies including Canada, Mexico, South Korea, Australia and the EU have won temporary exemptions from application of the tariffs, pending talks with the United States.
The focus on world trade disputes shifts this week to Washington and the semiannual meetings of the International Monetary Fund. Behind the battle: an effort by each country to gain an edge in their standoff over everything from steel to semiconductors.
The U.S. and China will each try to line up allies for their cause.
Much of the jockeying is likely to play out at meetings that started Thursday of finance ministers and central bankers from the Group of 20 and at Saturday's broader gathering of IMF member nations.
"There's a competition" between the world's two-largest economies to garner backing for their respective positions, said David Dollar, who was the U.S. Treasury's economic emissary to China from 2009 to 2013 and is now a senior fellow at the Brookings Institution in Washington.
The concerted attempts at coalition-building suggest that neither nation believes that a quick resolution of their various disputes is a given. Such a festering could act as a damper on global stock markets and the world economy by making investors and businesses more cautious about the outlook.
"I'm deeply concerned" about the relationship, said National Committee on U.S.-China Relations President Stephen Orlins, who worked on the normalization of ties between the two countries while at the U.S. State Department from 1976 to 1979. "Over the next 12, 18, 24 months it may be deeply, deeply disrupted."
Information for this article was contributed by Isabel Reynolds, Rich Miller, Enda Curran and Matthew Boesler of Bloomberg News and by Zeke Miller and Jill Colvin of The Associated Press.
Business on 04/20/2018
Print Headline: Japan's premier fails to persuade Trump on levies