SCOTT SIMON, HOST:
President Trump signs another executive order today as he travels to Harrisburg, Pa., to celebrate his 100th day in office. This EO, as they're called in D.C., directs his administration to review trade agreements for violations and abuses. A few weeks ago, a different executive order focused more on imbalances. Candidate Donald Trump promised to negotiate better trade deals for the United States or to rip them up. So he pulled out of the Trans-Pacific Partnership. But he kept the North American Free Trade Agreement, which he had savaged on the campaign trail.
And he's called a current trade deal with South Korea unacceptable even as North Korea menaces South Korea. Adam Behsudi covers trade for Politico. Speaking over Skype, he points to the real world effects that presidential commentary, like Trump's on South Korea, has around the world.
ADAM BEHSUDI: Well, I mean, I think we saw the value of the won go down and that spooked, probably, the market there. So yeah, these statements definitely do have an effect in the real world when they are said.
SIMON: Yeah. And is it a bad deal, as you see it? What does President Trump see that so disadvantageous to the U.S.?
BEHSUDI: So the vice president went to South Korea just recently. And apparently, in a meeting with U.S. businesses in Seoul, he highlighted the fact that the trade deficit had doubled in the five years and that there is still too many barriers to U.S. exports of goods and services. So he said the administration will review and possibly reform the deal.
SIMON: On this continent, the president, at one point, of course, had said that he was going to pull the U.S. out of NAFTA. But then he spoke to the prime minister of Canada and the president of Mexico and decided to try to work things out. What do the administrations in Ottawa and Mexico City make of that - a tough negotiating position on behalf of the U.S. or what?
BEHSUDI: Well, I mean, I think the reports kind of noted that Mexico very explicitly said we're not going to negotiate with a gun to our head and meaning that this threat of withdrawal won't bring us to the table, won't make it a constructive conversation. And Canada is - you know, they're playing it cool. They're putting out very calming sort of high-level statements.
And I think we're going to see a lot of Canada and Mexico strategizing together in terms of how to deal with this new relationship they have. And I think that there's definitely a lot of that happening when that news broke on Wednesday.
SIMON: Well, Mr. Behsudi, as you see it, what are some areas that - I'll put it this way - could stand some refinement in NAFTA that the United States might find more advantageous and that Canada and Mexico would accept?
BEHSUDI: Sure. I mean, NAFTA is - was negotiated in 19 - you know, the early '90s and that was predating the Internet, predating digital trade, Internet commerce. So that's something that probably can be updated and that all three sides - all three businesses in all three countries are looking forward to.
SIMON: And I guess a question that - I almost hesitate to ask, but are trade deficits always bad for an economy? Do they open up opportunities?
BEHSUDI: Yes, it can definitely be argued they are, you know, not - it's not a binary, black and white. Deficit is bad. A surplus is good.
SIMON: Well help us understand that if you can. Is there a practical example?
BEHSUDI: There's actually a fight going on right now with Canada over lumber. And the U.S. lumber producers argue that - have had brought a case - they've basically taken a case against Canadian lumber imports saying that the lumber up there is subsidized. It's underpriced, and it's being dumped into our market to the competitive detriment of U.S. producers. But then if you look at the homebuilders side, you know, lumber is an important material for houses.
And you can argue that the housing industry employs a lot of people in a lot of different ways. And if you're, you know, stopping that from happening or you're making it harder for them to have a selection of lumber at a competitive price, you know, you're going to hurt that industry.
SIMON: But then the housing people might have to buy more expensive lumber and that could increase the cost of houses, which Americans don't like either.
BEHSUDI: Right, right. Exactly. So it's a very kind of nuance balance or dance that is happening. And, you know, trade makes a good sort of talking point on the campaign trail. But when you really look at the nuance, you know, there are winners. There are losers. And, you know, there are different degrees of losers and winners. And it's kind of a very complex view of how the economy works.
SIMON: Adam Behsudi, who is a trade reporter with Politico. Thanks so much for being with us.
BEHSUDI: Thanks for having me.
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