Trade Is a Foreign Language

If you are interested in CSIS’s take on last week’s judicial decisions on tariffs, Scholl Chair Phil Luck and I have published commentaries (find them here and here, respectively). Today’s column is not about that.

Many professions have their own language—a collection of special terms, acronyms, and abbreviations that constitute a kind of shorthand that allows experts to make their points quickly and concisely. Trade is no exception. It has numbers (such as 201, 301, 232, and 337), abbreviations (such as AD/CVD, AGOA, TTP, TTIP, and CPTPP), and acronyms. In the last category, there are two new ones worth examining—new meanings for “MAGA” and “TACO.”

MAGA is widely known as a Trumpian term for Make America Great Again, but in some locations, it has begun to stand for something else: Make America Go Away. This is a reflection of the ill will and squandering of soft power the United States has generated in a few short months. Much of that, such as huge cuts in foreign assistance, the closing of Voice of America and other media outlets delivering accurate information to people in countries denied access to it, and the crackdown on foreign students studying, or hoping to study, in the United States, is not directly related to trade policy. Tariffs, however, are directly related, and it is hard to underestimate the damage the tariffs and the way they have been rolled out, and back in, and back out—a classic yo-yo policy—have done. The message the United States has sent to the rest of the world through all these measures is that we are no longer a reliable partner, and we are beginning to see the obvious logical response to that: Other countries are searching for new partners.

To the extent there is good news, it is that the new partner search seems to be a remarkably conventional one—countries are talking about free trade agreements, about lowering barriers and liberalizing trade in much the same way U.S. presidents before Trump did. The difference is they’re doing it without us. The United States is on the sidelines “just watching.” That does suggest, though, that the world may be done with us, but it is not done with globalization, which may continue just as it did in the pre-Trump era.

The second new acronym is TACO, which stands for “Trump Always Chickens Out,” referring to his pattern of announcing big tariffs and then backing down. I had originally decided not to write about this, since raising it may convince him he needs to actually pull the trigger on some of his threats, but since reporters have already asked him about this directly—and gotten a predictably cranky response—the taco is out of the truck, so to speak, and anything I write is not going to make any difference.

Satire is usually most successful when it reveals a grain of truth, and that is certainly the case with TACO. There is a pattern here, and it revealed itself in the first Trump administration in the negotiations with China. Those started out with big demands—end subsidies, stop stealing intellectual property, stop forced technology transfers, and so on—and ended with China making some modest concessions and agreeing to buy more U.S. products, a pledge it failed to meet. We now see the pattern repeating. The agreement with the United Kingdom—the only one so far—as I wrote three weeks ago—was only 20 percent tangible and 80 percent aspirational—issues the two sides agreed to discuss in the future. To the surprise of many, the United States even made some modest concessions, even though the expectation was that there would be none.

While other pending negotiations may slow down due to the uncertainty created by last week’s court rulings, they are not likely to stop. Other countries are not going to be forced into agreements by a threat that may no longer be viable, but they will not walk away either. Talks will continue, and if the UK agreement is any precedent and rumors about others are accurate, any other eventual agreements will include considerably less than what the United States demanded.

Trump’s refutation of TACO is that it is all brilliant strategy. Make maximalist demands and threats, and then gradually fall back as the other side makes concessions. The desired result is that the United States gives up very little compared to the others. Unfortunately for Trump, that is not the way it is playing out. The United States is not giving up much, but it is not getting much either. The initial China deal was described above, and the shortcomings of the UK deal are described in my previous column. It appears that in other cases, countries are resisting concessions the United States is demanding, which is one reason why there have been so few agreements announced, despite repeated claims they are imminent. Regardless of how brilliant the strategy is, however, its real cost is the uncertainty it has created in the business and investment community, which has gotten in the way of achieving Trump’s main goal of reshoring manufacturing.

The one thing we can be sure of is that the results will be the greatest agreements in history. But on that, the markets will make the final judgment, and so far, they appear to be pricing them at a discount.

William A. Reinsch holds the Scholl Chair in International Business at the Center for Strategic and International Studies in Washington, D.C.