Trump zig-zags on trade jarring but could get results, experts say

WASHINGTON, UNITED STATES: President Donald Trump’s hard line on trade with China has fuelled fears of an economically-damaging trade war, while his swings from threat to praise have generated uncertainty among businesses.

But trade experts concede the pressure on China to reform could actually work, especially as it is in Beijing’s own interests to make the reforms the US is demanding.

Trump’s Twitter feed maps his lurches from tough talk to optimism and back again, a pattern that has left businesses alternately alarmed and relieved.

China “must end unfair trade, take down barriers,” Trump tweeted April 7.

That was followed on April 8 by this tweet: “President Xi (Jinping) and I will always be friends, no matter what happens with our dispute on trade.” Just Thursday, Trump ordered his top aides to look at re-entering the 11-nation Trans-Pacific Partnership, from which he withdrew right after taking office, generating a wave of optimism.

But that was quickly quelled when, in a late night tweet, he said he would only rejoin if the US received a “substantially better” deal that the one his predecessor Barack Obama negotiated.

The main source of concern is the escalating tensions with China after Trump last month imposed steep tariffs on steel and aluminium imports, and then hit Beijing with punitive duties in retaliation for massive theft of US intellectual property.

China struck back, targeting US farmers and pork producers, and an angry Trump then upped the ante and threaten duties on another US$100 billion in imports – which have yet to be imposed.

The magnitude of the dispute – if the threats are carried out – would hit consumers and businesses alike.

“The business community worries about escalation of trade tensions, this idea of tit-for-tat that has characterized the past couple of weeks has been troubling,” said Jake Colvin, vice president of the National Foreign Trade Council, a pro-trade business group.

The dispute “creates uncertainty and confusion for the business community,” he told AFP, noting that some firms could be hit by a “double whammy” of higher costs for inputs from China, and higher prices for the goods they export to the country.

While businesses share the concern about China’s behaviour “the question that we wrestle with is how to make things better and not worse.”

And still to come are tightened restrictions on Chinese investment in sensitive US sectors, due in about a month from the US Treasury Department. Some Chinese executives already have said they are pausing investments in the US given the confusion, and concerns about the new restrictions.

Robert Manning, a US-China analyst at the Atlantic Council, calls Trump’s view of global trade ‘nutty,’ but acknowledges that his tough talk may be working.

Early this week Xi delivered a major speech in which he promised to reduce import tariffs on US autos and loosen restrictions on investment from US companies, which frequently are required to enter joint ventures as a minority owner in exchange for access to the Chinese market.