Trade: Did Trump wimp out on China?
Coming from the best-selling author of The Art of the Deal, the so-called trade deal President Trump struck last week with China sure “doesn’t look too artful,” said Andrew Ross Sorkin in The New York Times. Trump, a protectionist who sees trade deficits as the ultimate evil, had been threatening to slap tariffs worth up to $150 billion on Chinese imports, as punishment for Chinese trade practices that Trump likened to “rape.” But when a Chinese delegation resisted his negotiators’ demands at talks in Washington, Trump’s tough talk evaporated—as it so often does. Treasury Secretary Steven Mnuchin said the threatened trade war is now “on hold.” The self-proclaimed World’s Greatest Negotiator came away with only a vague pledge from the Chinese to “significantly increase” their spending on U.S. goods—which China’s expanding middle class is already doing. “Trump’s trade agenda is deeply confused,” said Catherine Rampell in The Washington Post. Mnuchin and chief economic adviser Larry Kudlow are Wall Street free traders, while Trump chief trade adviser Peter Navarro is a fierce, anti-China protectionist. The Chinese exploited this division in the Washington talks, as well as Trump’s desperation for China’s help in his upcoming summit with North Korea. “On Team USA, it’s been amateur hour.”
The press is trying to paint this as an “American defeat,” said The Wall Street Journal in an editorial, because the Chinese rebuffed Trump’s demand for a $200 billion reduction in the trade deficit. “But that target was always arbitrary and fanciful.” The “good news” is that the nations not only avoided a trade war but also agreed that the way forward lies in “opening China’s market, not closing America’s.” Only “time will tell” if China will make good on its vague promises to buy more American goods and to respect U.S. intellectual property, said Stuart Eizenstat in TheHill.com. But it seems clear that Trump’s threats of tariffs “got China’s attention” in a way that nicer overtures from previous presidents never did.
Still, we need a more sophisticated approach, said Oren Cass in NationalReview.com. Trump’s monomaniacal focus on the U.S.-China trade deficit is like “playing one-dimensional chess,” and does little to dismantle China’s wider architecture of unfair trade and business practices. Chinese firms compete with the full weight of China’s government behind them and have been stealing U.S. intellectual property for years. The best way to curb those abuses would be in concert with other nations—but Trump foolishly withdrew the U.S. from the Trans-Pacific Partnership, which would have made such joint efforts possible. Trump’s trade strategy has a fundamental flaw, said William Pesek in Politico.com. By trying to revive a fading U.S. manufacturing industry, the president is “dragging America back to 1985,” while China is rapidly developing an economy based on the future: technology, artificial intelligence, robotics, and green energy.
Trump may not understand economics, said Robert Kuttner in Prospect.org, but he “has a keen nose for winning political symbolism.” Blaming China and NAFTA as the real cause of American decline resonates with his base, even if it’s “economically irrational.” Trump thinks that as long as he sounds like he’s fighting for blue-collar workers and farmers, they’ll stick with him. Trump “almost certainly doesn’t care” about the details of trade policy, said Jeff Spross in TheWeek.com. That suggests he’ll let his advisers tinker around the margins of the status quo with both China and NAFTA, and then declare victory. The winners of that strategy will be China, Wall Street, most U.S. corporations, and “good old-fashioned Republican economic orthodoxy.”