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U.S. President Trump has threatened a 100% tariff hike on Chinese goods, and Harry Broadman, former US Assistant Trade Representative and Chief of Staff of the President’s Council of Economic Advisers, tries to make sense out of both countries’ moves at Al Jazeera.
Delegations from China and the US are discussing the risks and opportunities in trade for both countries in London. However, according to former US trade negotiator Harry Broadman, stability in trade relations is crucial for any outcomes that may follow those negotiations, as he notes at Al Jazeera. Unfortunately, processes for those stable relations are lacking, he adds.
For a week, US President Trump has been speculating on how a call with his Chinese counterpart, Xi Jinping, will solve their trade issues. Harry Broadman, a former US trade representative, explains in Politico why Trump is wrong.
Politico:
Trump’s expectation that a call with Xi can reboot U.S.-China trade talks on those issues and render substantive results defies the diplomatic and policymaking protocols of China’s ruling Chinese Communist Party.
“Trump is a deal maker. Xi Jinping is not a deal maker — he’s a Party guy at the top of an administrative superstructure,” said Harry Broadman, a former assistant U.S. trade representative in the George H.W. Bush and Bill Clinton administrations. “I cannot imagine that Xi would get into specifics — at most they might agree on certain principles but that’s not likely to satisfy Trump.”
There’s also a risk that a call between the two leaders could backfire for Trump by undermining longer term trade negotiations with China.
Harry Broadman, a former assistant U.S. trade representative in the administrations of George H.W. Bush and Bill Clinton, tells Politico that China proved to be much less of a pushover than the Trump team expected it to be when they started to impose tariffs. “Whoever is advising him clearly does not understand China.”
Politico:
Former high-level trade officials experienced with Chinese negotiation tactics said Trump’s expectation that Xi — like Mexico’s President Claudia Sheinbaum and now-former Canadian Prime Minister Justin Trudeau — would drop everything and pursue tariff relief was misplaced.
“Trump thought that China was a pushover and so he behaved like a New Yorker saying ‘let’s do a deal,’” said Harry Broadman, a former assistant U.S. trade representative in the George H.W. Bush and Bill Clinton administrations. “Whoever is advising him clearly does not understand China.”…
The Chinese government is willing to roll back tariffs on specific U.S. imports deemed essential to the Chinese economy, including pharmaceuticals, Reuters reported Friday. But it’s unclear whether Beijing is ready to broker a one-on-one meeting between Xi and Trump to fast-track wider tariff reductions and lay the groundwork for a new trade deal.
“They know Trump is in an untenable position and are letting the Energizer Bunny run down his batteries while they sit on the sidelines because they think they gain nothing by addressing him,” said Broadman. “Trump’s behavior is antithetical to the way they believe leaders should behave.”
While Trump has long accused China of ripping off the US on trade, analysts have questioned whether his administration has a clear goal of what it wants to achieve with its tariffs.
Harry Broadman, a former US assistant trade representative and one of the chief negotiators of the WTO, said it is not clear whether Trump wants to close the trade deficit with China or end business with the country outright.
“Markets are layered through the different stages of production, you’ve got components coming from all over the world. The global economy is finely chopped up vertically, so it’s not obvious who the winners and losers are.”
Broadman said Trump’s approach to trade has been simplistic and unrealistic.
“He’s obviously a deals guy in real estate, but not international markets … How he thinks is, ‘How can I win and how can I make the opponent lose?’” he said.
“It’s not more sophisticated than that. He’s not interested in splitting the spoils. But you don’t get very far with that.”
While the stiff inflation rate was one of the key reasons US voters preferred Trump over Harris, Trump’s announced China tariffs would increase the costs for US consumers, warns Harry Broadman, former U.S. assistant trade representative in the George H. W. Bush administration in Dow Jones.
Dow Jones:
Among the biggest uncertainty is the issue of tariffs, what products they will hit and what technology sectors could be hurt. The bottom line, though, on tariffs is that they will lead to increased goods prices.
“Trump’s plans will make us worse off economically,” said Harry Broadman, a principal at WestExec Advisors, senior economist at the Rand Corp. and former U.S. assistant trade representative in the George H. W. Bush administration. “In the short run, the consumer or individual will pay higher prices for imports and that means the cost of what they are buying has risen significantly. That means you are going to have inflation, people will find their disposable income decreased.”
During his first term in office, Trump’s administration imposed tariffs on a wide range of products from China, but the tariffs he has discussed for his next term are even higher and could be more detrimental…
During his first term in office, Trump’s administration imposed tariffs on a wide range of products from China, but the tariffs he has discussed for his next term are far higher and could be more detrimental.
“It would be one thing if Trump said, ‘I am going to work with the G7 leaders’,” Broadman said. “That is what needs to be done, but instead individual country leaders become susceptible to sweetheart deals with China.” He said if the U.S. does not work with other countries, China will retaliate. “You do it arm-and-arm with allies. Because what China will do is play off importing nations off other importing nations.”
China is heading for a fundamental breakdown, argues Harry Broadman, Partner, and Chair, Emerging Markets Practice, Berkeley Research Group LLC, at a wide-ranging speech at the Charleston Chamber of Commerce, November 2022 (Charleston, South Carolina). It started by bailing out investors at its stock markets, which are no real markets, he says.
The sanctions put on Russia because of the Ukraine crisis by the US and its allies might move Russian trade to China, says Harry Broadman, a former US trade negotiator, and World Bank official, to Reuters.
Reuters:
A review of World Bank and United Nations trade data shows that since lesser sanctions were imposed in 2014 after Russia annexed Ukraine’s Crimea, China has emerged as its biggest export destination.
New sanctions could prompt Russia to try to deepen its non-dollar denominated trade ties with Beijing in an effort to skirt the restrictions, said Harry Broadman, a former US trade negotiator and World Bank official with China and Russia experience.
“The problem with sanctions, especially involving an oil producer, which is what Russia is, will be leakage in the system,” Broadman said. “China may say, ‘We’re going to buy oil on the open market and if it’s Russian oil, so be it.’”
China entry into the World Trade Organization (WTO) was twenty years ago seen as a success for the global trade, but then the WTO was unable to enforce its rules onto its new member, says Harry Broadman, chief of staff of the US President’s council of economic advisers (1990-1991) and US assistant trade representative (1991-1993) in an interview with Politico. What are the options to deal with China in international trade?
Politico:
U.S. companies should have stepped up to call out unfair Chinese trading practices, but most did not out of fear of potential state reprisals, Broadman said.
“A lot of U.S. firms would come to us and they would complain about Chinese [imports] and say that we had to put in place safeguards, but they’d always add, ‘Don’t tell the Chinese that we came to you and told you this!’” said Broadman, now at the Berkeley Research Group. “They knew that if we started punishing the Chinese in a particular sector, they were going to know that it was Company X and Company Y [that complained].”
But he cautioned against perceptions that China’s WTO entry has been a universally one-sided losing proposition for U.S. businesses that invested in China and established operations there.
“You can see that the firms who are there today were largely the firms who have been there for the last 20 years and they wouldn’t be there if they were not making money,” Broadman said.
There are growing calls for the U.S. to demand meaningful accountability for China within the WTO system or to pursue fairer trade terms outside of it.
“We’re now at a point where Beijing is clearly in broad violation of its 2001 accession agreement,” Broadman said, proposing three options that China should be given: renegotiate its WTO membership terms, be shown the WTO “exit door,” or immediately execute its promised reforms.
Practically, however, the WTO may be incapable of bringing China’s unfair trading practices to heel because all 164 member nations — including China itself — need to accede to any new agreements.
China did not comply with the conditions it signed up for when it entered the World Trade Organization (WTO), says former White House advisor Harry Broadman at the NACD Northern California Chapter in a discussion about American business in China. And while US president Joe Biden has taken on China bilaterally, it needs collective action to change the country’s attitude to trade, he adds.
Harry Broadman, managing director and chair of the emerging markets practice at Berkeley Research Group, said during the same broadcast it is not immediately clear how B3W will differ from existing tools available to G7 member countries.
“These are the same countries who are the main shareholders of the World Bank, the IMF, the African Development Bank, and the like, and those institutions already have instruments and investments in place with frankly pretty good governance structures,” he said. “It raises in my mind the question as to what is the ultimate aim here.
“If you look at the communique from the summit, the wording of what the B3W means is really quite vague, which suggests to me this is – at least at this juncture – more of a branding exercise than boots on the ground.”
Former White House advisor Harry Broadman looks at US president Biden’s trip to Europe, the G7, and NATO, and explains why China should be also on the agenda of NATO for Cheddar News.
The major economies in the G-7 need more investments in R&D and collaboration in science and technology to compete with China, says former US assistant trade representative Harry Broadmanat CNBC. “We’ve done really well among democratic countries collaborating on investment and trade, but we’ve done an extraordinarily poor job in R&D,” he said.
CNBC:
Harry Broadman, managing director and chair of the emerging markets and CFIUS practices at Berkeley Research Group, told CNBC last week that developed countries’ ability to create, execute and sell products that advance the climate agenda without negatively affecting the labor market would shape the economic landscape in the coming years.
“As long as people believe that there is going to be a market for such technologies and that’s going to be dictated by how cheap it is, and whether it destroys jobs or creates jobs — it does not necessarily have to destroy jobs at all — that is going to be the driving imperative, and I think that race is already underway,” Broadman said.
Ahead of the Group of Seven summit in Cornwall, U.K. in June, Broadman, an assistant U.S. trade representative during the Clinton administration, said the group of major economies will need to drastically evolve their research and development and sovereign-to-sovereign science and technology collaborations in order to compete with China.
Broadman is pushing for an “R&D7” to be included on the G-7 agenda, similar to other working groups across members on issues of global importance. Its aim would be to reform the structure underlying the negotiation and execution of international science and technology agreements among G-7 countries. It would also form a stand-alone body tasked with ensuring that these agreements strengthen and recalibrate R&D collaboration within the G-7.
“We’ve done really well among democratic countries collaborating on investment and trade, but we’ve done an extraordinarily poor job in R&D, and this is where China is frankly a huge competitive and potentially a huge economic and maybe geopolitical, threat,” he said.
Former White House official Harry Broadmanlooks at how US President Biden will act differently than his predecessor Trump. Biden will seek more alliances to face China on the international field, he tells at Bloomberg. Biden will listen to others, unlike Trump, Broadman adds.
Former US President Donald Trump tried to derail relations with China by banning stocks from Chinese companies at US stock markets. Now, under President Joe Biden, certainty for stock markets including the Chinese shares is key, says former White House advisor Harry Broadman at US News. Although there might be some other dangers.
US News:
The use of investment bans on Chinese stocks is a “curious tool,” says Harry Broadman, managing director with Berkeley Research Group, who has served in two White House administrations. He was chief of staff of the president’s council of economic advisers under President George H. W. Bush and then served as a U.S. assistant trade representative under President Bill Clinton.
“One would think having U.S. investors in [Chinese] firms could produce salutary outcomes for people interested in reforms,” Broadman says.
“You don’t need a Ph.D. in economics to understand that if you’re going to continue to change the regulatory treatment, including the listing and delisting of firms,” uncertainty will follow, Broadman says…
Another risk that’s generally well understood by investors is the tight control that Chinese President Xi Jinping and the Chinese Communist Party have over industries within their borders. Investors can’t expect to challenge unfair government policies with sound legal maneuverings as they might in the U.S.; China’s whims instantly become reality – just ask Jack Ma, the majority shareholder in Ant Group, whose IPO was unceremoniously put on ice in the wake of Ma’s criticism of Chinese regulators.
But there’s another risk that’s a bit more alarming, says former U.S. diplomat Broadman, and it’s arguably a much bigger concern for U.S. investors than any future delisting threat.
“I’ve been surprised that U.S. regulators over the years have treated Chinese firms and investments as being of the same quality as firms from the EU or Brazil,” Broadman says. “The notion that these firms are following international accounting rules is a bit of a fantasy,” Broadman says of Chinese stocks in general.
“The reason why U.S. regulators are interested in allowing these Chinese firms to be listed is you’ve got U.S. stock exchanges that are in competition (with other international) equity markets,” Broadman says.
“You come to the age-old question of public policy and what’s the right call to make. But I see no real discussion of the quality of their accounting. And I think it’s a big issue,” Broadman asserts.
