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Commerce Secretary Howard Lutnick went on CNBC this fall to promote a deal so great that he deemed it “off the rails.” The government of Japan, he explained, had brought down its tariff rate by giving President Donald Trump $550 billion to spend on whatever he wants. “They are going to give America money when we ask for it to build the projects,” he said with a grin.
The president himself had been describing the agreement similarly—and was dismayed to later learn that the billionaire businessman turned bureaucrat, his longtime friend, had misunderstood the terms.
Japanese leaders—who typically favor quiet diplomacy—made clear that they had not given Trump the blank check that Lutnick described. They would have a say in how the money was invested, and maintained the right to reject proposals. Making matters worse, the Trump administration had initially increased tariffs on Japan in August, during the rollout of the broader deal, an error that its chief negotiator described as “extremely regrettable.” Taro Kono, a member of Japan’s House of Representatives, told reporters that month, as the confusion was playing out in public: “Washington is just randomly shooting, and they are shooting some like-minded countries from behind.”
Trump was irritated by public skepticism over the agreement’s terms, as were top White House aides, five officials with direct knowledge of the discussions told us. “Howard is telling the president things that just aren’t true,” a Trump confidant said, referencing the Japan deal. “You just can’t do that.” A senior administration official clarified that Trump’s “ire wasn’t just directed at Howard, but also at the Japanese negotiators.” The White House declined to comment on the miscommunication.
It was not the first Lutnick blunder to frustrate the president, White House officials and others told us. We talked with more than a dozen people familiar with Lutnick’s approach, who all requested to speak anonymously so as not to anger Lutnick or the president. They say that the commerce secretary—a key player in executing the president’s economic agenda—lacked a basic understanding of his negotiations with foreign trade partners, held up deals, berated allies, and openly bickered with other members of Trump’s team.
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