HILLARY VAUGHN IN WASHINGTON,
THANK YOU SO MUCH.
>>> 2018 WAS THE YEAR THE TRADE
WARS BROKE OUT.
2019 MIGHT BE THE YEAR THE
GLOBAL ECONOMY REALLY STARTS TO
FEEL THE PAIN OF ALL THIS.
BLOOMBERG'S GLOBAL TRADE TRACKER
SAYS IMPORTERS FRONT-LOADED
THEIR ORDERS AHEAD OF THE
TARIFFS, SETTING THE STAGE FOR A
SLOWDOWN NEXT YEAR.
BANK OF AMERICA IS ESTIMATING
THAT THESE WARS HAVE ALREADY
COST THE S&P 500 A 6% DROP THIS
YEAR ALONE, WHILE CHINA'S MARKET
HAS LOST $2 TRILLION IN VALUE
THIS YEAR.
WE BRING IN AMBASSADOR TERRY
MILLER, DIRECTOR OF THE HERITAGE
FOUNDATION INTERNATIONAL TRADE
AND ECONOMIC CENTER, TO BREAK
ALL OF THIS DOWN.
AMBASSADOR, THANKS FOR COMING
ON.
I GUESS OUR QUESTION IS HOW BAD
DOES IT GET BEFORE IT GETS ANY
BETTER IN OUR NEGOTIATIONS WITH
BEIJING?
>> MY GOODNESS, THERE'S SO MUCH
GOOD NEWS IN THE MARKET TODAY, I
HATE TO BE THE BEARER OF BAD
NEWS HERE.
LAUREN: BUT YOU WILL BE.
>> I DO THINK THERE'S THE
POSSIBILITY IF THIS TRADE WAR
WITH CHINA IS NOT RESOLVED, IT
COULD START TO HAVE A VERY
NEGATIVE IMPACT ON THE U.S.
ECONOMY.
WHAT WE'RE GOING TO SEE IS
PRICES RISING, WE WILL SEE
PRESSURE ON THE CURRENCY, WE
WILL SEE ALL KINDS OF INVESTMENT
PRESSURE AND A GENERAL SLOWDOWN
BOTH IN GLOBAL TRADE AND GLOBAL
GDP GROWTH.
THAT'S NOT GOING TO BE GOOD FOR
ANYBODY.
ALL THAT MEANS IS THAT THE U.S.
NEGOTIATORS AND CHINESE
NEGOTIATORS REALLY NEED TO GET
DOWN TO WORK AND GET THE JOB
DONE.
LAUREN: HOW MUCH DO YOU SEE THE
U.S. MARKET DECOUPLING FROM THE
CHINESE MARKET AND IS THAT A
POSITIVE OR A NEGATIVE?
>> WELL, I DON'T THINK THERE'S
GOING TO BE MASSIVE DECOUPLING.
THE RELATIONSHIP BETWEEN CHINA
AND THE UNITED STATES IS HIGHLY
BENEFICIAL FOR BOTH COUNTRIES.
SO IT SEEMS TO ME THAT WE'RE
GOING TO SEE SOME PULLBACK, BUT
MAYBE A REBALANCING WOULD BE A
BETTER WAY TO DESCRIBE IT, WITH
THE CHINESE DOING A LITTLE MORE
PURCHASING, THE U.S. DOING A
LITTLE MORE SELLING.
THAT SHOULD BE SOMETHING THAT
PRESIDENT TRUMP LIKES A LOT, AND
MAYBE COULD BE A FACTOR IN
GETTING THIS TRADE WAR RESOLVED.
LAUREN: IT DOESN'T SEEM
PRESIDENT XI IS THAT WILLING TO
NEGOTIATE, UNFORTUNATELY.
A LOT OF FOLKS SAY THAT'S
BECAUSE HE DOESN'T HAVE TO WORRY
ABOUT TERM LIMITS OR GETTING
RE-ELECTED.
SO IT BEGS THE QUESTION, IS AN
UNEVEN PLAYING FIELD BETTER THAN
PERHAPS NO PLAYING FIELD?
>> WELL, I THINK THE PLAYING
FIELD, THE MORE WE GET THE
GOVERNMENTS OUT OF TRYING TO
INFLUENCE THIS PLAYING FIELD,
THE MORE LEVEL IT WILL BECOME.
I'M A GREAT BELIEVER IN THE
POWER OF MARKETS TO GET THE
PRICES RIGHT AND GET THE BUYING
AND THE SELLING RIGHT.
PRESIDENT XI IS IN A VERY STRONG
POSITION BUT HE'S NOT
UNASSAILABLE.
HE HAS TO DELIVER JOBS FOR HIS
PEOPLE.
HE HAS TO DELIVER A HIGH GROWTH
RATE FOR THE CHINESE ECONOMY.
THOSE ARE VERY REAL PRESSURES
FOR HIM, JUST IN THE WAY PUBLIC
OPINION IS PRESSURE ON THE
PRESIDENT AND HIS TEAM IN THE
WHITE HOUSE.
I THINK BOTH SIDES HAVE AN
INCENTIVE TO GET SOMETHING DONE
HERE.
LAUREN: AMBASSADOR, YOU HAVE NOW
KILLED THE RALLY.
THE DOW IS UP ALMOST 4%.
YOU HAVE ACTUALLY ENCOURAGED IT.
JAPAN, AN ALLY OF THE U.S., SET
TO CUT TARIFFS ON SEVERAL U.S.
ALLIES, INCLUDING AUSTRALIA AND
CANADA IN JUST A FEW DAYS, THEN
AGAIN IN FEBRUARY FOR MANY
EUROPEAN COUNTRIES.
DO YOU SEE OTHER ALLIANCES
FORMING WITHOUT THE U.S.?
>> I DON'T THINK SO.
THE U.S. HAS SUCH A DOMINANT
ROLE IN THE WORLD ECONOMY, IT
WOULD TAKE I THINK SEVERAL YEARS
OF EXTREMELY BAD ECONOMIC POLICY
ON THE PART OF THE UNITED STATES
TO EVEN BEGIN THE PROCESS WHERE
THERE WOULD BE A MAJOR
RESTRUCTURING OF INTERNATIONAL
TRADE OR INTERNATIONAL FINANCIAL
FLOWS.
THESE MOVES BY THE JAPANESE
GOVERNMENT SHOULD BE VERY
WELCOMED BY EVERYONE AND I THINK
WILL BE GOOD FOR THE JAPANESE
ECONOMY, AND A STRONGER JAPANESE
ECONOMY WILL BE GOOD FOR US AS
WELL.
LAUREN: ALL RIGHT.
ON CHINA, AND THE TRADE SPAT
THAT WE'VE GOT GOING ON WITH
THEM, ARE YOU OPTIMISTIC FOR
2019 OR NO?
>> I'M PRETTY OPTIMISTIC.
I THINK THERE'S A LOT OF
PRESSURE TO GET SOMETHING DONE
BY THE END OF MARCH, AND I THINK