President Donald Trump continues to defend using tariffs as part of his trade strategy, threatening an additional tariff increase on Chinese imports if he cannot make progress at the G20 summit with Chinese President Xi Jinping. Despite China vowing retaliation in response, Trump believes tariffs are a key negotiating tool.
While Michigan Democratic Rep. Dan Kildee may not agree with Trump’s tactics he does “think the president was right to take on China on these structural problems that we see in terms of the way China interacts with the rest of the world.”
“When he's right, he's right, when he's wrong, he's wrong. I find a lot of times when he's wrong. But in this case, he was right to take them out,” Kildee told Yahoo Finance.
But Kildee said Trump made an error in using U.S. allies instead of working with them. “When he [Trump] used 232 tariffs against Canada, declaring them to be a national security threat, in order to put pressure on China over steel — I think that was a big mistake. We lost credibility.”
The congressman is also concerned that Trump will not “insist on changes in terms of the way they [China] deal with state ownership, intellectual property, ultimately, currency manipulation,” rather than a “transactional resolution.” So far, this hasn’t happened but he is worried that the U.S. lost its opportunity to take China on multilaterally.
Key to USMCA is enforcing labor reform
Trump also used tariff threats on Mexican goods as a potential tool to force Mexico to control the flow of migrants entering the U.S. On Monday, Trump confirmed, via tweets, that the U.S. and Mexico reached a “signed agreement” that would avert the imposition of Mexico tariffs. However, it is uncertain how the deal impacts the U.S.-Mexico-Canada trade agreement (USMCA).
We have fully signed and documented another very important part of the Immigration and Security deal with Mexico, one that the U.S. has been asking about getting for many years. It will be revealed in the not too distant future and will need a vote by Mexico’s Legislative body!..— Donald J. Trump (@realDonaldTrump) June 10, 2019
“The big issue with USMCA is whether or not we can count on Mexico to implement the labor reforms in particular that they have passed,” Kildee explained. “The president himself, when he imposed the tariffs, indicated one of the concerns that he had is that Mexico doesn't enforce its own law, and he wanted to force them to do so.”
“Many of us are uncomfortable moving forward unless we have a mechanism of enforcement that is stronger than what we've seen in the past... we want to make sure this agreement is as good as it can possibly be,” he said. “We've been down this road before. We don't want to go through what we went through with NAFTA the first time around.”
Kildee emphasized concerns regarding labor reform and how that impacts Michigan. In doing so, Kildee expressed support for a proposed structure of a “bilateral entity that would enforce new labor laws.” The key to passing the USMCA, according to Kildee, would be to adhere to Democrat’s interests and focus on enforcement.
Taylor Locke is a producer for On the Move on Yahoo Finance