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Trump orders investigation of countries with trade deficit with US, India on the list

Extricating the US from unfair trade deals, agreements and situations was one of Trump’s chief election planks.

business Updated: Apr 03, 2017 20:46 IST
Yashwant Raj
Donald Trump

The $24 billion trade deficit with India is for goods for 2016, a figure that has consistently risen over the years.(Reuters)

Donald Trump will sign an executive order Friday that will launch a 90-day investigation of countries against whom the United States runs a bilateral trade deficit. The list, led by China, also includes India, Japan, Germany, South Korea and Canada.

Another executive order, to be issued at the same time, will be about the “long-festering” problem of “under-collection” of anti-dumping and countervailing duties, dealing with imports that are substantially cheaper than local rivals because of state-subsidies.

The first executive action will direct the commerce department and a new White House trade council to “identify every form of trade abuse and every non-reciprocal practice that contributes to the US trade deficit,” commerce secretary Wilbur Ross told reporters on a call previewing the orders on Thursday.

Among the key questions that will be addressed during the 90-day investigation will be “the extent to which our bilateral deficit with that country is the result of cheating or other inappropriate behaviour,” Ross said.

He added that other questions will include the extent to which the deficit was caused by free trade agreements that did not produce the “forecast benefit for our country”.

China tops the list with $347 billion trade surplus over the US, followed by Japan with $69 billion, Germany with $65 billion, Mexico with $62 billion, Ireland with $36 billion, Vietnam with $32 billion, Italy with $28 billion, South Korea with $28 billion, Malaysia with $25 billion, India with $24 billion, Thailand with $19 billion, France with $16 billion, Switzerland with $14 billion, Taiwan with $13 billion, Indonesia with $13 billion and Canada with $11 billion.

The trade deficit with India is for goods for 2016, and it’s been rising every year — going up from $14 billion in 2011.

China might look the chief target here, given the size of the deficit, Trump’s remarks from the campaign trail and the timing of the executive orders — just days before the President meets his Chinese counterpart Xi Jinping. His administration stressed that was not the case, stating that the orders were a message to the entire world.

But Trump himself suggested otherwise on Twitter.

“The meeting next week with China will be a very difficult one in that we can no longer have massive trade deficits...

...and job losses. American companies must be prepared to look at other alternatives.”

Extricating the US from unfair trade deals, agreements and situations was one of Trump’s chief election planks that also included pulling America out of the 12-nation Trans-Pacific Partnership and renegotiating NAFTA, a three-country trade agreement with neighbours Canada and Mexico.

But Ross clarified not all deficits would have been caused by unfair deals or cheating. The exceptions would include oil imports by the US that may have cost large trade deficits, or because some products that are not made in the US and have to be imported.

He said the first-of-its kind analysis will demonstrate the depth of the administration’s intention to take a very measured and analytical approach to “analyzing the problem and, therefore, to developing the solutions for it”.