Trump digs in for major U.S. trade reset with the world

Donald Trump got some of his loudest campaign cheers with a simple pledge to "get tough on trade."

Now the president-elect and his supporters will find out how complex that goal will be.

As with many of his proposed policies, Trump spoke only in broad outlines during the 18 months he rallied his support.

As the new Trump administration begins to take shape, the direction of those policies will be heavily determined by the legacy of decades of global trade treaties, occasional disputes and well-established international law.

But a lot will depend on the people he chooses to represent U.S. trade interests.

One of those key appointments will be the U.S. trade representative, a Cabinet-level job overseeing hundreds of employees and offices around the world. Since its formation in 1962, the position has been tasked with overseeing the global flow of trillions of dollars of U.S. goods and services with the rest of the world.

One early indication of where a Trump administration would steer U.S. trade policy came this summer with the appointment of Dan DiMicco, former CEO of Nucor Corporation, as his trade advisor.

Nucor, the largest U.S. steel producer, is a scrappy survivor of the massive consolidation of the American steel industry that shed millions of jobs in the 1970s and 1980s as the nation's backbone supplier of postwar manufacturing fell into decline.

That industry was born in the geographic intersection of rich deposits of steel's two main ingredients: Pennsylvania coal and Michigan iron ore. Those two states sent Trump to the White House on Election Day.

Today, the fiery forges that once melted raw iron to build U.S. skyscrapers, consumer appliances and family station wagons have largely gone cold.

Under CEO DiMicco, Nucor, now North America's largest recycler, survived the decline of Big Steel by building a business melting down scrap steel produced by others — some 17 million tons last year.

Last month, Trump promised to restore the Midwest as the "manufacturing hub of the world again" and "fight for steel businesses that have been taken away."

"We're going to bring back steel," he told a cheering crowd. "Your steel has been stolen from you."

In DiMicco, the president-elect has chosen an outspoken advisor — and potential appointee — who shares his belief that restoring industries like steel manufacturing means getting "tough" with global competitors.

"When we negotiate free trade agreements, we are lousy at it," DiMicco told CNBC a year ago. "They are dominated by folks that have a predominant benefit from getting more exports into the world as opposed to having balanced trade, which is good for all Americans."

With DiMicco as one of the architects, the Trump campaign has sketched out initial plans for reforming U.S. trade relations with the rest of the world. In a heavily footnoted position paper in June, Trump laid out a seven-step plan to "change our failed trade policy — quickly" and "bring back our jobs."

On top of the list was a promise to scrap the Obama administration's Trans-Pacific Partnership, a trade deal designed to expand U.S. exports with 11 Pacific Rim trading partners. With the next Congress now under GOP control, there is no prospect for a lame-duck vote before Obama leaves office.

Trump also promised to "appoint the toughest and smartest trade negotiators to fight on behalf of American workers."

He pledged to direct the secretary of commerce "to identify every violation of trade agreements a foreign country is currently using to harm our workers," and then "use every tool under American and international law to end these abuses."

He vowed to "immediately renegotiate" the North American Free Trade Agreement with Canada and Mexico "to get a better deal for our workers. ... I don't mean just a little bit better, I mean a lot better," he said, threatening to withdraw completely if the terms aren't acceptable.

Trump said he also plans to ask his treasury secretary "to label China a currency manipulator." (It's not clear what, if any, sanctions the president-elect would try to couple with that declaration.)

The president-elect also promised to "instruct the U.S. trade representative to bring trade cases against China, both in this country and at the WTO." Such an order would continue the work of the Obama administration in lodging 14 trade enforcement actions against China.

The last plank of Trump's trade agenda referenced the use of "every lawful presidential power to remedy trade disputes," including U.S. laws on the books that pre-date the current trade agreements in force. While technically plausible, invoking decades-old, outdated U.S trade laws with global trading partners in 2017 would face major legal and political headwinds.

But no matter who Trump picks as his trade policy pitbull, the job may be very different if the president-elect follows through on a widely overlooked proposal to reorganize the way the U.S. government deals with global trade partners.

Last month, Trump announced a plan for a major reorganization of the "mismanaged" policy overseen by "dozens of competing bureaucracies spread across the Departments of Agriculture, Commerce, Labor, State and Treasury Department and the U.S. trade representative."

The Trump administration, he said, will consolidate trade policymaking in a single office called the "American Desk" housed in the Department of Commerce.

"The mission of the American Desk will be to protect the economic interests of the American worker and the national interests of the United States," Trump said.

So those who are now reading the tea leaves of Trump's trade policies may need to look beyond the established pecking order of appointments to trade-related departments and agencies.

And, while the White House has broad powers over trade policy, the Trump administration won't be able to act unilaterally.

Trade policy impacts the economic fortunes of every congressional district, some more than others. Pro-trade Democrats largely held on to their seats in the House and Senate.

Trump's trade war threats against two of the nation's largest trading partners, Mexico and China, have raised worries among many export-driven U.S. businesses about the bottom-line impact of his protectionist proposals.

And while the White House has broad powers over trade policy, the Trump administration won't be able to act unilaterally.

Trade policy impacts the economic fortunes of every congressional district, some more than others. Pro-trade Democrats largely held on to their seats in the House and Senate.

And while Trump swept into office by tapping into widespread voter hostility to free trade policies, much of the GOP and American business leadership strongly support the goal of expanding markets for U.S. exports.

Tough trade talk won Trump the White House. But a full-blown trade war would hurt many of the voters who supported him.