The Trump transition team announced that President-elect Donald Trump has named Robert Lighthizer as his U.S. Trade Representative. Lighthizer served as the deputy USTR under former President Ronald Reagan, playing a major role in developing trade policy and negotiating two dozen bilateral international agreements on topics from steel to grain, the transition team said in its statement.
“He has extensive experience striking agreements that protect some of the most important sectors of our economy, and has repeatedly fought in the private sector to prevent bad deals from hurting Americans,” Trump said in an e-mailed statement. “He will do an amazing job helping turn around the failed trade policies which have robbed so many Americans of prosperity.”
The appointment is a further sign the incoming administration will take a tougher line on China, according to Bloomberg.
Lighthizer has previously accused China of unfair trade practices, in line with views held by Peter Navarro, a China critic who Trump last month named to head a newly formed White House National Trade Council. In a 2011 article published in the Washington Times, Lighthizer said that using tariffs to promote American industry was a Republican tenet harking back to pro-business politicians who established the party.
“The icon of modern conservatism, Ronald Reagan, imposed quotas on imported steel, protected Harley-Davidson from Japanese competition, restrained import of semiconductors and automobiles, and took myriad similar steps to keep American industry strong,” Lighthizer wrote. “How does allowing China to constantly rig trade in its favor advance the core conservative goal of making markets more efficient? Markets do not run better when manufacturing shifts to China largely because of the actions of its government.”
Lighthizer, Reagan's deputy trade rep, would replace Michael Froman, the Obama administration’s representative who led negotiations on the now largely defunct Pacific trade pact that would have covered nearly 40 percent of the global economy and was seen as a counterpoint to China’s rising clout.
Trump has argued for fewer global trade arrangement, and claims that deals such as the North American Free Trade Agreement and the Trans-Pacific Partnership kill American jobs. He has vowed to make smarter deals and slap punitive tariffs on countries that violate trade rules, particularly China. a frequent target of his attacks.
Some more background on Lighthizer courtesy of BBG:
As a partner at the Washington offices of law firm Skadden, Arps, Slate, Meagher & Flom LLP, Lighthizer has focused on traditional trade litigation, policy advice and legislative initiatives for a roster of large U.S. corporations and coalitions, according to the firm’s website.
Trump chose Lighthizer after considering several others, including Jovita Carranza, a former executive with United Parcel Service Inc. who served as deputy administrator for the U.S. Small Business Administration under President George W. Bush. Dan DiMicco, former head of steel-maker Nucor Corp., was also considered.
Lighthizer met Trump at his Mar-a-Lago club in Florida on Dec. 19. The president-elect is closing in on a full selection of cabinet nominees. Now that he has settled on his trade representative, top posts yet to be filled are agriculture secretary, veterans affairs secretary, and chairman of the Council of Economic Advisers.
The choice of Lighthizer would make sense because Trump’s economic plan is “Reagan-esque,” said He Weiwen, deputy director of the Beijing-based Center for China and Globalization and a former business attache in Chinese consulates in New York and San Francisco. “In the second term of Reagan’s administration, his trade team put a lot of pressure on Japan in bilateral negotiations,” He said. “If Lighthizer is picked, a hardline approach towards China can be expected.”
Trump has also linked geopolitical matters to America’s trade ties, suggesting his administration will consider the behavior of countries on defense and security in the framework of its economic relationships.
Meanwhile, overnight Trump continued his attacks on China, when he warned on Monday that nuclear aggression from North Korea won’t be tolerated, and castigated China for not taking a stronger stance. China is the major trading partner of Kim Jong Un’s reclusive regime and a key source of its energy shipments. As such it has been seen in the past as holding some sway over Pyongyang’s behavior.
“North Korea just stated that it is in the final stages of developing a nuclear weapon capable of reaching parts of the U.S. It won’t happen!” Trump tweeted. And later: “China has been taking out massive amounts of money & wealth from the U.S. in totally one-sided trade, but won’t help with North Korea. Nice!”
Perhaps responding to this, also overnight China Daily reported that the Chinese economy has already passed the stage in its development that would make it vulnerable to trade war, noting that trade is no longer the main contributor to the nation’s GDP growth. The report also said that the nation is preparing for a rise in protectionism: “Protectionism will continue to rise and trade frictions will become more violent,” Li Guanghui, vice-president of the Chinese Academy of International Trade and Economic Cooperation affiliated with Ministry of Commerce, is cited as saying.
Whether or not China is invulnerable to trade war remains to be seen, but for now stocks are taking the very real possibility of one as quite bullish.