Is President Trump's trade war even supposed to end? Given how quickly the White House's latest deal with China popped onto the scene, and how quickly it seemed to melt into air, it's worth considering the answer might be "no."
Media outlets, policy observers, and investors were all aflutter on Friday when the White House announced a "phase one" agreement with China. In exchange for Trump dropping a planned tariff increase — from 25 percent to 30 percent on $250 billion worth of Chinese exports — China would double its annual agricultural purchases from America. The deal would also lay down some rules to open up China's domestic market to foreign investors, protect U.S. intellectual property, and limit the moves China could make to devalue its currency.
Furthermore, particularly thorny questions — such as what to do about the security concerns with Huawei, or Chinese rules requiring foreign businesses to share technological and trade secrets as the price of opening up shop in the country — would be tabled for later phases. This seemed to indicate a softening of the president's previous demand for a comprehensive deal resolving all these issues at once.
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By Monday, the excitement had soured. The agreement was a handshake deal; nothing was written down. Observers almost immediately noted the difference between the White House's confident and triumphal tone and the more circumspect descriptions coming out of the Chinese camp. The latter wanted further talks later this month before any "phase one" deal is inked. And there's still no word on what will happen with another set of tariffs — a new 15 percent duty on $160 billion worth of Chinese exports — the White House is threatening will take place in December.
The stock market had cooled off this week, as concrete progress on the trade conflict between the U.S. and China seemed to retreat once again into the horizon. "There is not yet a viable path to existing tariffs declining, and tariff escalation remains a meaningful risk," Morgan Stanley analysts wrote to their clients.
At this point, no one should really be surprised by this "Lucy and Charlie Brown with the football" outcome. As Neil Irwin wrote at The New York Times, Trump has repeatedly struck at China with higher tariffs, inviting retaliation, which leads to talks and negotiations, which eventually go nowhere, which leads to further tariff threats — wash, rinse, repeat. "Trust between the two sides suffered a big blow in May 2018, when Trump put a stop to a deal for China to buy more energy and agricultural goods to narrow the trade deficit," Bloomberg observed, summing up the recent history. "The U.S. president further sowed distrust in August when he claimed that Chinese officials had called and requested to restart trade talks."
"In the Trump trade strategy over the last two years, tariffs have acted as a ratchet — moving in only one direction or holding steady, never reversing," Irwin added. "Apparent agreements are always subject to renegotiation."
You would think, of course, that the point of a trade war is to eventually achieve some concrete policy outcome, and thus end. But this is Trump we're talking about. From the beginning, it was rather unclear exactly what circumstances would qualify as "victory" in the trade conflict. The president has railed against lost U.S. jobs in manufacturing and tradable sectors, as well as our massive trade deficit with China. But the actual concrete demands that have emerged from Trump's trade war relate to questions of intellectual property, China's aforementioned technology transfer policies, and the general openness of China's domestic market to foreign — i.e. American — businesses and investors. These are demands that, if met, would have considerable impact on U.S. corporate profits and payouts to wealthy American shareholders, but they would do little-to-nothing for blue collar jobs or wages.
The one big exception to this is the question of currency values: specifically, that China's currency perpetually undercuts America's on global exchange markets. Trump's brought the issue up, but it's flitted in and out of negotiations like a ghost. To the degree it sticks, it seems intended to protect the effectiveness of Trump's tariffs, rather than as a goal in itself.
However, if we assume that, for Trump, perpetual trade war is a goal in and of itself, all of this makes a lot more sense.
We know from reporting that neither Trump nor his inner circle thought he'd actually win in 2016. The whole campaign was a PR stunt to sell books and Fox News appearances; it was salesmanship all the way down. Most likely, the White House's trade demands are incoherent because achieving a list of demands was never the point; the trade war is another PR stunt and sales job.
Trump has a genuine, if feral, political cunning. And one thing Trump realized was that there's a huge gap between how most everyday voters think of globalized trade — particularly with China — and how most elite policymakers think of it. That created a massive rhetorical opportunity that Trump exploited to the hilt. But recognizing a rhetorical opportunity, and actually having a concrete policy solution to the problem the opportunity represents, are too entirely different things. Thus, Trump keeps allowing solutions to the trade war to slip away because solutions were never something he put much thought into. A successful end to the trade war is a one-time event that will eventually fade into memory. But an ongoing trade war is a never-ending opportunity to keep selling the narrative.
"The only things we've learned are that Trump loves tariffs and he doesn't have a long-term plan," Mary Lovely, a senior fellow at the Peterson Institute for International Economics, told the Times. All too true, but "no plan" may very well have been the plan all along.
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