STEVE INSKEEP, HOST:
Mike Froman has been listening with us. He was the U.S. trade representative during the Obama administration. Welcome back to the program.
MIKE FROMAN: Good morning.
INSKEEP: Did the president just lose a lot of negotiating leverage?
FROMAN: Well, I think it's - he has more complex processes to go through, but he still has a lot of authority, and the court recognized that under other provisions of law to impose tariffs on other countries. So while the tariff - when you bring down - the tariff that Americans faced was about 16% prior to this ruling. Immediately afterwards, it was about 9%. And with the new tariff, it goes back up to about 13.7%. So it's not that different than it was before, and he has provisions under laws called Section 301 or Section 232 which he can put in place over the next several months to raise tariffs again against other countries. So he still has a fair amount of leverage, but it's harder for him just to make a decision at 10 a.m. and impose it that afternoon. He's got to go through some process to get there.
INSKEEP: Meaning that you have to prove that there is a valid concern facing the United States that would justify raising taxes on people who import stuff?
FROMAN: Yes. But when you go through those other procedures and say, this is a national security issue or here is an unfair trade practice, the U.S. trade representative, the Department of Commerce, they have a fair degree of discretion in terms of how to implement those laws.
INSKEEP: Are there situations where the president would not be able to recreate the tariffs of the past year at all?
FROMAN: I think the main outcome from - of this is that the president won't be able to use tariffs as easily outside the trade area, outside the economic area. You know, when he imposed a 50% tariff on Brazil for the way they were treating former President Bolsonaro or threatened to put tariffs on a handful of European countries that sent military forces to Greenland in solidarity, those are tariffs that you can't put on under Section 232 or Section 301. They're not trade related, and he's going to have to find other ways to demonstrate his displeasure with other countries than reaching for the tariff tool.
INSKEEP: What do you make of the situation of other countries - Indonesia comes to mind - where just last week, Indonesia reached a deal with the United States? They gave all sorts of tariff concessions, lowered their own trade barriers for U.S. products going to Indonesia, in order to get some tariff relief, and now it turns out they could have gotten that for free because the tariffs that were threatened against them have been obliterated by the Supreme Court. What would you do in that situation?
FROMAN: Well, first of all, I don't think the tariffs are really obliterated because he's got this 15% tariff.
INSKEEP: True.
FROMAN: It's unclear whether it's 10 or 15%. In the press conference and the executive order, it's 10%, but on Saturday, he tweeted out 15%. He can put that in place for 150 days, for about five months, during which time he can use his other trade authorities to raise tariffs if he so chooses. My guess is in most countries - aren't going to want to track the ire of President Trump by either abrogating old agreements or trying to renegotiate agreements that they have now with the United States. They're going to wait and see how he proceeds with these other trade authorities and then adjust accordingly.
But at this point, I think - you know, one thing I found interesting - and Asia is an interesting example - that the countries there cared a little bit less about the overall tariff that they faced into the United States than they cared about the relative tariff vis-a-vis their neighbors so that Malaysia cared a lot that it was not higher than Vietnam, because that's who they saw as their competitor in terms of exporting to the United States. But my guess is countries will continue to want to sort of keep - tamp down any tension with the United States and wait and see what happens over time.
INSKEEP: I want to ask briefly about another aspect of all of this, and it has to do with Europe and free trade. As the United States keeps trying to raise trade barriers with the rest of the world, Europeans have been reaching out to Asian countries to develop and strengthen free trade deals. I ask you about this because when you were U.S. trade representative, you tried to put through the Trans-Pacific Partnership, linking the United States with a bunch of Asian nations. It was rejected by Trump ultimately. A lot of Democrats didn't like it either, and the U.S. pulled out of that. Is Europe about to supplant the United States as a proponent of free trade?
FROMAN: Well, in many respects, they could. They've just recently signed agreements with Mercosur, which is a trading bloc in South America. They've signed a trade agreement with India, which had been under negotiation for something like 20 years. And as you said, they're now talking to the successor of TPP, called CPTPP, which continues to exist, which the U.K. already joined and which Europe is now discussing some kind of relationship with. So, yes, there could be a new trading block comprised of much of the Asia Pacific, the U.K. and potentially even the EU going forward.
INSKEEP: And not the United States. Mike Froman...
FROMAN: And not the United States.
INSKEEP: ...Is a former U.S. trade representative, now president of the Council on Foreign Relations. Thank you so much.
FROMAN: Thanks for having me. Transcript provided by NPR, Copyright NPR.
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