RACHEL MARTIN, HOST:
After launching a trade war against China and threatening one against Europe, President Trump spent this past week doing a bit of damage control. On Wednesday, the president and the head of the European Commission met to try to ease those trade tensions. Here's President Trump.
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PRESIDENT DONALD TRUMP: We want to further strengthen this trade relationship to the benefit of all American and European citizens.
MARTIN: The next day, President Trump hopped on Air Force One to visit farmers in Iowa to try to convince them that short-term pain from tariffs will mean long-term gain.
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TRUMP: We just opened up Europe for you, farmers. You're not going to be too angry with Trump, I can tell you.
MARTIN: To help us understand the Trump administration's larger trade mission and goals, we are joined now by Peter Navarro. He's a top trade adviser to the president. Mr. Navarro, thanks for being back on the show.
PETER NAVARRO: Good morning, Rachel. How are you?
MARTIN: I'm doing well. Thanks, sir. So this meeting between President Trump and the head of the European Commission, it basically ended in an agreement to continue to talk about future negotiations to smooth this trading relationship. What was the actual substance?
NAVARRO: First of all, the event, I think, was a strong validation of the president's strategy, which is to take tough trade actions in response to very unfair trade practices. In the case of Europe, we have a situation where if we want to sell them a car, they charge us a 10 percent tariff. If they want to sell us a car, we charge them a 2.5 percent tariff. That's not fair. They have a whole range of non-tariff barriers. What we got from the European event, and it was a great victory for this country, was a commitment to the three zeroes, we call it - zero tariffs, zero non-tariff barriers, zero subsidies. In addition to that, we got a strong commitment from the EU to help reform the World Trade Organization. Before President Trump came into office, everybody knew the WTO was broken, but nobody would say it. Now they're acknowledging it. That's good. For the farmers of this country, we got a commitment from Europeans to buy our soybeans. For the oil and gas producers in this country, we got a commitment to buy oil and gas.
MARTIN: But let me ask you...
NAVARRO: So we're going to have negotiations. It was a great day for America, and a strong validation of President Trump's strong, tough trade policy.
MARTIN: Let me ask you about the soybeans. Is that really a big win? I mean, China's retaliatory tariffs on American soybeans meant that the U.S. was already going to have to sell more to Europe. So did anything really change?
NAVARRO: I think there's a bigger question here for your listeners. We know - I think you would agree with us - that China steals our intellectual property and our technologies. I think you'd even agree that they engage in unfair trade practices which result in the transfer of our factories, jobs and wealth to them on the order of about a third of a trillion dollars a year. Now, what the president is simply doing is defending you and the rest of America from China's unfair trade practices. And what China is doing is trying to target our farmers and attempt to hold them hostage to bully them and hurt us politically. And so that's an interesting question, should we allow China to bully us?
In terms of the soybean question, China is the largest buyer of U.S. exports. But the problem they have is that if they don't buy them, soybeans can be sold to other places in the world, whether it's Europe or Brazil or anywhere in between. So what we would ask as an administration is people to see the chessboard, that China is trying to hold us hostage. They rob our house, and we try to stop them, and now they're bullying our farmers...
MARTIN: We should say, though...
NAVARRO: ...And that's simply not fair.
MARTIN: ...Even with the European sales, it's not going to make up for the losses to China on soybeans.
NAVARRO: Well, let me - if you want to stay on soybeans, I think it's useful to do. We've seen, for example, a 50 percent increase in soybean purchases from third parties since China has been trying to apply this pressure. What China did, very strategically, leading up to the negotiations - which they refused to engage in in a constructive way - was build tremendous amounts of inventories of soybeans specifically to manipulate the market price. Those inventories won't last. China has an enormous appetite for soybeans. And the soybeans, to be clear, are used mostly as animal feed.
NAVARRO: China, they consume 50 percent of the pork in this world.
MARTIN: Mr. Navarro, I'm going to - I appreciate that.
MARTIN: I do want to pivot us in the time remaining because...
NAVARRO: Let's pivot.
MARTIN: ...American businesses are having to scale back their ambitions because of the president's approach to trade. That's based on NPR's reporting...
NAVARRO: Nobody's scaling back in this country.
MARTIN: Well, that's actually not true. There are - construction companies and consortiums that represent them have indicated that those companies don't know which way the administration is going on trade. One day, the president is for tariffs. The next day, he's against them. And so it's an environment that's not stable so they're scaling back ambitions.
NAVARRO: The president has been in favor of fair trade and used tariffs in order to get to that point. And what we have, a situation now - you mentioned scaling back. Nobody's scaling back. We have the highest level of manufacture optimism we've ever seen.
MARTIN: I mean, it's just not true. The construction industry and people we have talked with have said that they are scaling back.
NAVARRO: Anecdotes are not data, Rachel. Let's look at the data, see what happens...
MARTIN: All right. Anecdotes...
NAVARRO: What we are seeing is the data is very positive.
MARTIN: I want to play a clip of tape. So let's listen, not to an anecdote but to a farmer in his own words...
MARTIN: ...American workers who've had to bear the brunt of the tariffs. This is what Gregg Hora, a pig farmer in Iowa, has to say.
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GREGG HORA: There has been a negative effect of the tariffs, and it has reflected in less exports and a lower price to U.S. pig farmers that at this time we're having a $20 to $25 per pig loss, which has negative effects across rural America.
MARTIN: What do you say to that farmer?
NAVARRO: Sonny Perdue, secretary of agriculture, announced a program this week to make sure that we defend our farmers from Chinese aggression in this space. Let's be clear, Rachel, what they're trying to do - China's trying to punish our farmers to weaken our resolve politically so that they can keep using their unfair trade practices, stealing our own intellectual property and basically advancing at our expense. Let's recognize that. I mean, you could've put a quote in...
MARTIN: So your answer is a $12 billion subsidy, correct?
NAVARRO: You could have put a quote in from the ceo of U.S. Steel, who said yesterday at Granite City, Ill., when the president visited there, that the only reason why he restarted that plant is because of the president's tariffs on steel. So what we're seeing is very strong economic data. We're seeing the validation with the European deal of President Trump's very strong trade practices on behalf of America. And I would just appeal to your audience. Just look at what China's trying to do. They're trying to bully us, hold our farmers hostage. I think that's worth a discussion.
MARTIN: Last question, Peter.
MARTIN: Aren't American consumers getting hit twice here? Because the answer seems to be a $12 billion subsidy to farmers to offset the price of these tariffs to them. American consumers are going to have to pay higher prices because of the tariffs, and then to ease the pain on the producers to pay for the $12 billion, that's going to come on the backs of the taxpayers.
NAVARRO: When China joined the World Trade Organization in 2001, we had 15 years of cheaper prices. We also lost over 70,000 factories, over 5 million manufacturing jobs. There's a high cost to artificially low, cheap prices when countries cheat. And when they cheat, they try to steal our jobs. What we're seeing in the Trump economy is wages going up for the first time in a long time. We're seeing unemployment go down to levels we haven't seen since the 1990s. This is a strong economy. This president's economic policies are succeeding, and trade is a key part of that.
NAVARRO: And it's all good.
MARTIN: We'll have you back on to talk more. Peter Navarro, trade adviser to the president, thanks so much. OK, NPR's Uri Berliner is with me in the studio. He's been listening in to that conversation. He covers trade for NPR. So, Uri, clearly a lot to unpack in that conversation. What struck you most about what Mr. Navarro said?
URI BERLINER, BYLINE: Well, Peter Navarro was talking about the strong validation of the president’s strategy, his tough trade policies. And he was talking about that statement release by President Trump and the head of the European Commission where they were going to try and get to zero tariffs on industrial goods and remove trade barriers and lower all kinds of other impediments to trade between Europe and the United States. The interesting thing about it is it is very much like a framework, a trade agreement that was being negotiated by the Obama administration in Europe several years ago that was later abandoned. And if there’s one thing about President Trump we know, he’s had contempt for President Obama’s policies and these kind of big, multicounty trade agreements.
MARTIN: OK. At the same time, we have big economic news this morning, something the Trump administration has been looking forward to. We’ve got the latest GDP numbers, which appear to be good news for the Trump administration - 4.1 percent, right, Uri?
BERLINER: Yep, 4.1 percent growth in the second quarter - a very strong quarter. The economy is doing very well right now and, you know, this was a combination of factors - strong consumer spending, business investment, some impact from the tax cuts. The question is whether this is sustainable, whether the benefits from the tax cuts will fade over time and whether the president’s trade policies, tariffs, will inhibit growth in coming quarters.
MARTIN: I mean, this is something the president has said for a long time, that he wanted to get to continuous quarters of at least 3 and ideally 4 percent growth. You’re saying it really depends on whether or not this is sustainable because some of this has got to be an effort to circumvent inevitable effects of the tariffs that people are anticipating.
BERLINER: Right, exactly. So in anticipation of these tariffs, countries like China in particular were buying up soybeans because they were expecting soybean prices to go higher. So some of…
MARTIN: Because of the tariffs...
BERLINER: Because of the tariffs.
MARTIN: …We’re going to build the prices up, yeah. So they were buying more to stock up, essentially, before that price hike took effect.
BERLINER: Right. So that boosts the economy somewhat in the short term, but once that buying stops, then it’s a drag.
MARTIN: All right. So we’re going to have to - the real indicator will be whether or not the economy can sustain at this level of growth over time.
BERLINER: Exactly, a level of 4 percent would be extraordinary and very hard to sustain.
MARTIN: All right, NPR’s Uri Berliner. Thanks so much, Uri.
BERLINER: You're welcome. Transcript provided by NPR, Copyright NPR.