Trump's dealmaking skills on trial as India, Japan trade deals hit snag
US President Donald Trump is struggling to get India to sign a new trade agreement despite agreeing to leave the more contentious issues for a later date.
Trump was expected to announce a trade deal, albeit a limited one, during his meeting with Indian Prime Minister Narendra Modi in New York on Tuesday. But instead, the US president said the two sides would soon sign an agreement that would set the stage for a more comprehensive deal "down the road." It's the latest setback for the erstwhile real estate magnate who rates his negotiating skills highly.
"I think he (Trump) is discovering that dealing with leaders of other countries is different from dealing with other real estate developers," Bill Reinsch, an international business expert at Washington DC-based Center for Strategic and International Studies, told DW. "National leaders have their own cultures and rules and their own domestic politics that are more important than a good relationship with the US president," he said, referring to the supposed close rapport Trump shares with Modi.
New Delhi and Washington are discussing a limited trade package that has seen the US call on India to lower tariffs on certain US goods, especially farm products and remove restrictions on US medical devices and electronics. India in return has asked the US to restore preferential treatment for some Indian exports that was revoked by the Trump administration earlier this year. The talks are not dealing with thornier issues such as restrictions imposed by New Delhi on US e-commerce giants such as Amazon and Walmart-owned Flipkart and data localization rules that require US credit card companies Mastercard and Visa to locally store data on transactions made in India.
Master negotiator, really?
The "mini deal" by itself is a rare compromise by Trump, who has been raising stakes in an ongoing trade war with China to ensure Beijing agrees to a comprehensive trade deal covering a broad spectrum of issues ranging from intellectual property protection to national security.
Trump's self-proclaimed master negotiator tag is also being tested in trade discussions with close ally Japan, where the US president is struggling to get even a diluted trade deal through. The deal, which is expected to be signed during Trump's meeting with Japanese Prime Minister Shinzo Abe this week, has hit a roadblock with Tokyo seeking assurances that the US will not impose national security tariffs on Japanese-built cars and auto parts, Reuters reported on Tuesday.
"He (Trump) came in with a promise of being this great negotiator, the author of the book Art of the Deal ... But in practice he's been largely unable to negotiate just about anything," Maurice Schweitzer, a Wharton School professor specializing in negotiation, told DW. "I mean we've seen setbacks across the board whether it's Afghanistan, the Iranian deal or trade deals."
Trump's urgency to strike limited trade deals rather than comprehensive ones comes at a time the US economy is beginning to feel the pains of his aggressive trade policies, particularly against China — the world's manufacturing hub. The US-China trade war that saw the two sides slap punitive tariffs on hundreds of billions of goods has sparked recession fears globally, including in the US.
Last week, the US Federal Reserve cut its key interest rate for the second time in seven weeks and left the door open to additional cuts, citing rising uncertainty emanating from the trade dispute.
"Trump is running out of patience. It's clear that the US economy is weakening, and this is coinciding with the run-up to the 2020 election cycle," Schweitzer said. "He's concerned about his legacy and his re-election prospects … and he would like to take credit for some trade deals."
Of particular concern to Trump are US farmers — a key voter base — who have been stung by their leader's trade wars that have cost them sales in key markets such as China. It's not surprising, therefore, that the trade deals with India and Japan are expected to involve greater access for US agricultural products.
The US president has been banking on his tough trade policies, especially against China, to pander to his support base, which swears by Trump's narrative that the US has been wronged by its trading partners for decades. During his campaign for the White House, Trump had promised to negotiate comprehensive bilateral trade deals to correct those wrongs. But how are his supporters going to react to his watered-down deals, assuming he manages to sign them?
"I suspect Trump will try to sell whatever deals he is able to achieve as historic victories, even if they represent only modest changes over the status quo," Geoffrey Gertz from the Washington-based Brookings Institution, told DW. "Given that most voters only pay very minimal attention to the intricacies of trade negotiations, I suspect this strategy may be successful for some voters, though of course, Democrats will seek to advance a counternarrative."
Gertz cites the case of NAFTA — North American Free Trade Agreement — which was rechristened last year as USMCA — United States-Mexico-Canada Agreement — with only a few updates. Trump characteristically described the rewritten deal as "the most important, and largest, trade deal in US and world history."
The USMCA is yet to go into effect with the Trump administration struggling to persuade the House Democrats to back the deal. In fact, experts say the fate of the USMCA is another reason that may have prompted Trump to opt for mini deals, which do not necessarily need to be ratified by Congress.
Answer to US-China trade war
Trump administration officials have also been debating a limited trade deal with China to ease trade tensions between the world's two largest economies and arrest the economic slowdown, Bloomberg reported earlier this month.
The interim deal would delay and even remove some US tariffs in exchange for commitments from Beijing on intellectual property and agricultural purchases, Bloomberg said. But it would not cover the more contentious issues such as state subsidies and the excessive role of the state in the economy.
While a "mini deal" with China is likely to be cheered by the American farmers, it could irk many in the business community who have been demanding that Beijing make structural changes to ensure a level playing field.
"American companies want market access and fair treatment issues resolved. Period," Doug Barry from the US-China Business Council told DW. "While it may make sense to unravel the daunting number of issues and deal with them on separate tracks, companies want assurances they will be addressed."