Former US Secretary of Commerce Carlos Gutierrez provided valuable insight in regards the recently established US Section 232 tariffs on imported aluminum and steel during the ISRI 2018 Vegas conference. During his presentation, he discussed the challenges and opportunities during this time of uncertainty. Gutierrez mentioned how Chinese tariff retaliatory announcements have been methodical and fine-tuned against US products and how the outcome spectrum could be a US-China trade war or a shorter-lived situation.
Gutierrez also noted the unique factors that may make it more difficult for this administration to negotiate with China and possibly the North American Free Trade Agreement (NAFTA). In the case of negotiations with China, he highlighted the unfortunate efforts at public policy statements by President Trump instead of private negotiations which could prove more effective. The US-China engagement to-date has been at the cabinet level with no staff-level support which makes negotiations substantially more difficult as leaders in China and other countries “cannot be seen as weak by their constituents or other world players.” Additionally, he added, “For many countries including China, culture, and history loom large. We are a country of change, but we need to adapt our negotiations with trade partners by being sensitive about how they see trade.” In the case of NAFTA, he noted the difficulty in trying to negotiate such a large trade agreement in a span of mere months.
While acknowledging the challenges and uncertainty injected by Section 232 tariffs, discussion of a possible Section 301 (to address intellectual property rights), our inability to clearly forecast President Trump’s next move, and the unrealistic desire to bring low-tech manufacturing back to the US, Gutierrez recommended the US focus on its innovative strengths long-term. He added, “Issues we are facing are not trade or policies but of technology, specifically, the digital IQ of firms. I also recommend for all firms to educate employees on the importance of trade to the economy.”
As a short-term recommendation, he stated, “I would not make any large strategic decisions now if such can be avoided. I would use tactics, for now, separate from the pack, and develop the firm’s own foreign policy strategy. The uncertainty and changes are also bringing opportunities or no real negative change for some.”