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Scaramucci: Trump 'to surprise' with EU, NAFTA deals, then lean on China

President Donald Trump's hardball negotiating strategy is high-risk but could pay dividends, likely bringing trade deals with the European Union and North American Free Trade Agreement partners and freeing up the U.S. to press for better commercial terms with China, said Anthony Scaramucci, Trump's former White House Communications Director.

"I think he's going to surprise people," Scaramucci told S&P Global Market Intelligence in an interview less than two hours after he said he had spoken with Trump following the president's July 25 meeting with European Commission President Jean-Claude Juncker. "I think he's going to cut a deal with NAFTA. I think he's going to cut a deal with the South Koreans, a bilateral deal. I think he's eventually going to get the situation with the EU correct."

Scaramucci, a long-time Trump supporter and, for a brief period in 2017, his White House Communications Director, declined to say whether he discussed trade with the president, but said it was hard to deny the effectiveness of Trump's use of tariffs as a "cudgel" in spurring concessions. He added that he still feared that the tough approach in negotiations could harm the U.S. by damping global commerce and creating market distortions.

"You've got to be very careful once you initiate the war because all the things that you expect to happen, they don't happen, and all these new things happen that you didn't expect to happen," he said, describing Trump's tactics on trade as lighting the fuse of a powder keg.

Scaramucci, co-managing partner of Skybridge Capital, advised settling trade disputes with Canada, Mexico and the EU, to focus on trading issues with China, which has long been a particular bugbear for Trump. The president has threatened tariffs on up to $500 billion in Chinese imports.

"I talked to the president and he's very happy and in a very good mood about the conversation that he had with Juncker," Scaramucci said. "I think that's better tactics for us because that market with our market is 46% of the world's GDP," he said. "Now if we get it right with them, or at least press the pause button until we do, we can deal with the Chinese."

Under Trump, the U.S. has slapped tariffs on steel and aluminum imports on the grounds that it needs to protect industry for national security reasons, and pushed for renegotiation of the North America Free Trade Agreement, as well as concessions in trade with China and the European Union. The subsequent retaliation has ratcheted up concerns that a broader trade war could erupt and drag down economic growth around the world.

The former White House official stressed that his conversations with Trump were generic in nature, for the most part, and privileged. He said that he did not know what the president will ultimately decide to do in trade negotiations.

"At the end of the day the president has his own mind," he said.

Read the entire interview with Scaramucci here.