US could walk away from WTO if necessary, former Trump trade advisor says

Rethinking trade agreements

The U.S. needs better trade deals and if that means walking away from the World Trade Organization to make that happen, President Donald Trump may do just that, a former Trump trade advisor told CNBC on Friday.

Dan DiMicco, former president and CEO of Nucor, said China has not lived up to the promises it made when joining the WTO and no one is holding the country accountable.

"If people are not willing to renegotiate in good faith and promote fair trade … then [Trump] will have some tough decisions to make and I think he's up to the challenge of whatever he believes is necessary to make sure we get fair negotiations and fair treatment in these world bodies, including walking away," DiMicco said in an interview with "Power Lunch."

The WTO, formed in 1995, consists of a set of trade agreements negotiated and signed by its members. Those policies support free trade of goods and services across borders and oppose governments attempting to protect national industries with subsidies and taxes on imports.

However, critics believe countries like China have been unfairly allowed to reap benefits without cutting back on their own protectionist policies, to the harm of other members like the United States.

"President Trump, during his election run, made it very clear that if we cannot get the WTO to enforce the rules that everybody agreed to when they joined up, that the WTO will have lost its effectiveness and we will re-evaluate whether we even belong to the WTO or not," said DiMicco, who served on Trump's trade transition team.

Trump had his first call with China's president, Xi Jinping, on Thursday evening and agreed to honor China's "one China" policy.

— CNBC's Evelyn Cheng and Lori Ann LaRocco contributed to this report.

CORRECTION: This story has been updated to reflect the correct spelling of Nucor.