Despite Setbacks, Trump's Trade Warrior Peter Navarro Is Fighting On

By Bob Davis and William Mauldin Features Dow Jones Newswires

The White House's most hawkish trade adviser, Peter Navarro, says the administration is still pushing to win concessions from trading partners even though the president has notably softened his positions on China and Mexico.

Continue Reading Below

President Donald Trump no longer talks of imposing steep tariffs on Chinese imports, as he did during the campaign, and he dropped his pledge to name Beijing a currency manipulator. He also recently discarded a proposal that Mr. Navarro helped shape to pull the U.S. out of the North American Free Trade Agreement.

Mr. Trump's decision last month to kill the National Trade Council, created shortly after the election and led by Mr. Navarro, raised questions about how much influence economic "nationalists" still had over policies. Mr. Navarro's views have clashed with those of Gary Cohn, the former Goldman Sachs Inc. president who is director of the National Economic Council. Mr. Cohn, of the administration's "globalist" contingent, has been a moderating force on trade issues, White House staffers and lobbyists say.

"I don't worry about getting outmaneuvered," Mr. Navarro said in an interview. "I just worry about getting things done." Mr. Cohn didn't immediately respond to a request for comment.

At the start of the administration, Mr. Navarro loomed large in economic policy making. The University of California, Irvine, economist had helped shape the Trump campaign's trade threats. The NTC was initially viewed as being on a par with the White House's powerful National Security Council and NEC. In January, The Economist magazine said he was about to become " one of the world's most powerful economists."

Mr. Cohn quickly staffed up the NEC, hiring two trade experts, and won the portfolio for infrastructure spending.

Continue Reading Below

Mr. Trump replaced the NTC on April 29 with the Office of Trade and Manufacturing Policy, which continues to be housed in Mr. Navarro's spartan office across an alley from the White House and has two staffers -- Mr. Navarro and his deputy. Its agenda includes helping companies handle trade disputes, figuring out "Buy American" provisions and making sure the military has a strong industrial base. This is a more limited role than the NTC was expected to play.

"Navarro has been marginalized," said University of Maryland economist Peter Morici, who has long pushed for a more aggressive trade policy. The White House reshuffling "acknowledges that the NEC has won" the fight over the trade agenda, resulting in a less confrontational approach.

Mr. Navarro disputes Mr. Morici's conclusion, saying his clout is intact. Mr. Navarro, 67 years old, said he has started to meet one-on-one with Mr. Trump once a week for about 15 minutes. He said he advises Commerce Secretary Wilbur Ross and will also counsel Robert Lighthizer if Mr. Lighthizer is confirmed, as expected, as U.S. Trade Representative.

"I know my role in the process, which is to help them behind the scenes wherever and whenever I can," he said.

A spokeswoman for the USTR declined to comment. A Commerce spokesman said: "Many members of the White House senior staff have been giving us input on trade topics."

President Trump took Mr. Navarro with him on a trip to Harrisburg, Penn., to mark the 100th day of his administration. There, he called Mr. Navarro "one of the greats trying to protect our jobs" and gave Mr. Navarro a pen he used to sign the order creating the new trade office. Scott Paul, president of the Alliance for American Manufacturing, a steel-industry group, said Mr. Trump's actions indicate Mr. Navarro won't be bumped out of the White House, as some administration officials and trade lobbyists speculated.

The administration has launched a number of studies focusing on trade barriers, the trade deficit and excess capacity in the aluminum and steel industries, Mr. Navarro said. Trade analysts say the studies could be used to lay the groundwork to impose protective tariffs.

"While we have big trade deficits with many countries, each country requires a different strategy to reduce that deficit," Mr. Navarro said.

But the administration has also backed off more extreme measures, cheering business officials who worried that Mr. Trump, aided by Mr. Navarro, would ignite a trade war. The shift in stance has disappointed trade hawks who want the U.S. to put trade objectives ahead of foreign-policy goals.

"There is an ongoing tension within the administration between the campaign rhetoric and the reality of a very deeply interconnected global economy," said Josh Bolten, currently president of the Business Roundtable and a former White House chief of staff under President George W. Bush. "It's an open question as to which of those will prevail."

Mr. Navarro came to prominence by urging confrontational policies toward China in books such as "Death by China."

These days, he counsels patience. It would be counterproductive to call out a "prideful China" publicly during negotiations, he said.

"The best time to judge this administration's China policy is going to be a year or two from now to see what has actually happened," Mr. Navarro said.

As to Mr. Trump's threat to leave Nafta, which was withdrawn the same day it became public, Mr. Navarro said he is satisfied by how it was received by Mexico and Canada.

"It is now well understood that the president is serious about either getting a new and fair deal or getting out of Nafta," which is helping to move along negotiations on a revised trade pact, Mr. Navarro said.

Write to Bob Davis at bob.davis@wsj.com and William Mauldin at william.mauldin@wsj.com

(END) Dow Jones Newswires

May 08, 2017 16:49 ET (20:49 GMT)