Trump deserves credit for a truce with China
Washington has managed to send Beijing a real warning on trade without destroying relations. This is a major win
Just because the United States and China have agreed to call a truce in their trade war doesn’t mean that it’s over: Nonetheless, this is good news for the global economy. Instead of sweeping everything under the rug, as was the case before Donald Trump took office, America and China have found a new way of addressing conflict by talking openly.
Let’s consider the announcement itself. The US has pledged to postpone raising tariffs to 25% on $200 billion of Chinese goods. China in turn has pledged to buy more US goods, and the two countries have 90 days to reach a broader trade agreement, which is supposed to cover forced technology transfer and cyberattacks in addition to typical trade issues. That’s not enough time to allow the bureaucracies to work out the relevant details, but extensions can and probably will be granted.
The symbolic elements of the deal are at least as important. First, China has acknowledged that exports of fentanyl, a highly addictive synthetic drug, are a very real problem for the US, and has pledged to ban them. It’s a sign that China will start conducting its diplomacy less defensively and more like a normal member of the global community.
Another symbolically important detail: White House trade adviser Peter Navarro, a trade hawk, participated in the process. If Trump sees this deal as beneficial to him politically, Navarro’s protectionist influence may be reduced. Perhaps most important, both the Chinese government and public opinion are not in a downward spiralling, negative dynamic. I’m fully aware that giving China points for not getting worse is not the best way to keep score. Still, the Trump administration has managed to send China a real warning on trade, more than it received under previous US administrations, without destroying relations. That too has to count as a victory.
What is the most likely outcome from here?
Beijing might give US financial institutions freer rein within China. But they won’t dismantle their system of state-owned enterprises, as those are among China’s most powerful special interest groups. Nor will China give the major US tech companies free rein in China, if only for reasons of national security and China’s desire to build a surveillance state based on data controlled by China.
Overall, the grievances on the US side are significant, and the possible concessions on the Chinese side are minor. So the most likely outcome is only modest progress in difficult negotiations. Nonetheless, it’s not quite fair to describe the trade war with China as a problem that Trump started and then pretended to solve. This is an issue that predates Trump, and he deserves some credit for doing something to help solve it.