Politics

Former Office Depot CEO: Using tariffs to bolster trade leverage is working for Trump

Key Points
  • Steve Odland, president and CEO of Committee for Economic Development, says imposing tariffs helps Trump get results.
  • "It's all negotiations," he says.
  • The Trump administration will place tariffs on steel and aluminum imports from Canada, Mexico and the European Union, effective at midnight Thursday.
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The markets don't say we are in a trade war: Steve Odland

President Donald Trump is imposing tariffs to bolster trade leverage — and it's working, Steve Odland, president and CEO of the Committee for Economic Development, a Washington think tank, told CNBC

"They're putting tariffs on because every time they do, they get action," Odland, who is also a CNBC contributor, said Thursday on "Power Lunch." "That action can then be released a week later, a couple weeks later, but it's the only thing that moves it forward."

"It's all negotiations," said Odland, who was chairman and CEO of Office Depot from 2005 to 2010.

Trump announced steel and aluminum tariffs on March 1 as a way to alleviate what he deemed were unfair trading practices.

On Thursday, Commerce Secretary Wilbur Ross said the Trump administration will place those tariffs on steel and aluminum imports from Canada, Mexico and the European Union, effective at midnight Thursday. The levy will be 25 percent on steel imports and 10 percent on aluminum imports. The U.S. had given those allies a reprieve from the duties, but the exemptions were set to expire Friday.

Odland said he's not endorsing Trump's nontraditional way of conducting negotiations.

"I'm just simply explaining," he said. "It is effective."

"We can talk about whether it's the right way or the wrong way or following rules or not," Odland said. "The point though is that what we've been doing hasn't worked. [The administration] is trying something different now."

Regardless, the tariffs drew sharp criticism from around the world and the U.S. allies targeted planned retaliation. European Commission President Jean-Claude Juncker said the EU will introduce countermeasures. Canada announced retaliatory tariffs on steel and aluminum, and Mexico also said it would impose tariffs in response.

John Rutledge, chief investment officer at Safanad, a financial firm, called the administration's actions "totally irresponsible" and "ridiculous."

"This idea of negotiating by pointing guns at each other's heads and saying, 'I'll pull the trigger,' is really stupid," Rutledge, also a CNBC contributor, said Thursday on "Power Lunch." "It is not the way you conduct a trade negotiation."

"Trade policy is not done by announcements from presidents and Cabinet members," said Rutledge, who was one of the architects of former President Ronald Reagan's economic plan. "It's done by negotiations between teams, ahead of time."

But Odland pointed out that there are no agreed-upon rules for negotiating.

"Once [the rules] are negotiated, it's called WTO," he said.

"We all want the WTO to work," Odland said. "We want our trading partners to be fair. This is an attempt to do it. It's unconventional for sure."

The White House did not respond to a request for comment.