WASHINGTON — Automakers and other key stakeholders in the coming trade debates are urging the Trump administration's negotiators to look beyond the size of bilateral trade deficits in determining how to attack the nation's export gap and promote job growth.
They're responding to an executive order from President Donald Trump calling for the Commerce Department to lead an interagency review that zeros in on 16 trade partners with which the U.S. has a significant trade deficit.
The review will examine deficits on a product-by-product basis and study whether trading partners are using laws, regulations or business practices such as dumping to discriminate against U.S. products in ways that affect the U.S. manufacturing sector, jobs and wage growth. Commerce Secretary Wilbur Ross said the review will be completed before June 30 and be used to develop ways to decrease trade deficits and increase exports.
As a candidate, Trump suggested that U.S. trade deficits with China and Mexico were tied to unfair trade practices and the migration of manufacturing jobs, and called for steep tariffs to help reverse the tide. Last week, according to German media reports, he repeated his criticism of German automakers for importing Mexico-made cars into the U.S.
In 2016, the U.S. goods deficit was $746 billion.
Trade advocates and experts say stepped-up enforcement to stop cheating on trade agreements makes sense, but they say it's dangerous to read too much into a trade deficit, especially a bilateral deficit with a specific partner.
The American Automotive Policy Council — which represents Ford Motor Co., General Motors and Fiat Chrysler's U.S. arm — encouraged the administration to focus on opening markets where U.S. auto exports face stiff barriers to entry.
Some trade deficits are the result of "strategic, geographic sourcing patterns" designed to create an integrated manufacturing base, the group said in its response to the administration's order, "while others are the result of mercantilist and protectionist trade policies by our trade partners," such as import tariffs, regulatory hurdles and currency manipulation.