Trump should take advantage of the world's frustration with China, ex-US trade officials say 

Key Points
  • The U.S. isn't alone in its frustration with Chinese trade policy, and the Trump administration should take advantage of that, former U.S. trade officials say.
  • Benn Steil, author and director of international economics at the Council on Foreign Relations, says the Trump administration should turn to its allies in the WTO.
White House is unlikely to budge anytime soon in US-China trade talks, experts say

The U.S. isn't alone in its frustration with Chinese trade policy, and the Trump administration should take advantage of that, former U.S. trade officials told CNBC on Thursday after the U.S. imposed new tariffs on $16 billion worth of Chinese imports.

"I think the Chinese underestimated how frustrated and serious, not only the United States, but the entire global community, is with their practices that they need to change," Bruce Andrews, former U.S. deputy secretary of Commerce under President Obama, said on CNBC's "Squawk Alley."

From forcing foreign companies to enter into local joint ventures with Chinese companies to discriminatory subsidies and requiring foreign business to subject intellectual property to government checks, China's trade policies have burdened more than just the United States. Although the U.S. shares many of its grievances with its allies in the World Trade Organization, President Donald Trump has used almost every other weapon in his arsenal, said Benn Steil, author and Council on Foreign Relations director of economics.

"One tool the administration amazingly hasn't used is the WTO. They disparaged the WTO, but they have allies in Europe, in Latin America, in Asia who would join them in the trade action against China," Steil said on "Squawk Alley." "But instead they're talking about potentially pulling out, and I think it's a mistake."

The U.S. is currently in negotiations over a new NAFTA agreement with Mexico, but without Canada, which has historically been the closest ally of the U.S. Meanwhile, the Trump administration and China reopened trade talks on Wednesday, one day before a new round of U.S. tariffs on $16 billion worth of Chinese imports kicked in, prompting an equivalent retaliation from Beijing.

Carla Hills, the former U.S. trade representative who negotiated the first version of the North American Free Trade Agreement during the Bush administration, agreed that the Trump administration could be getting more effective results if it had the support of its allies when negotiating with China.

"We should have joined hands with our allies and confronted China about its discrimination, and its not giving us national treatment, because all of our allies were suffering the same problems," she said on CNBC's "Squawk on the Street."

"You win more when you sit down to try to negotiate, and you particularly win more when the rest of the developed world, representing all of the markets that China wants to use, are sitting beside you," she added.

Hills argued that a confrontational approach would only hurt the economies of both countries, and that there really shouldn't be winners and losers in trade at all.

Hurting China "should not be one of our objectives. We don't want either one of these economies to lose, we want a win-win situation," Hills said.

Regardless of the method of negotiation, Steil said he doesn't see a deal in sight until fall at the earliest, which means more pain to come on both sides.

Andrews agreed, "I think that both sides are actually underestimating the ability of the other side to endure pain."

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