Issue of the week: is Trump losing the China trade war?
The White House is trumpeting the success of a great peace deal. Not everyone is convinced
Donald Trump once claimed that a trade war with China would be “easy” to win. But after months of hostilities between the world’s two largest economies, a peace of sorts was hammered out last weekend, said The Times. Global stock markets jumped after the White House declared it had put the threat of imposing some $150bn of tariffs on Chinese products “on hold”, having received assurances from a visiting delegation, led by vice premier Liu He, that China would cut tariffs on US car imports and, to quote Trump on Twitter, “purchase from our Great American Farmers practically as much as our Farmers can produce”. In return, the US said it would lift its ban on US firms trading with ZTE – a Chinese telecoms firm that was facing collapse after being punished for breaking sanctions against Iran and North Korea.
Bring it on, said Brian Sozzi on Thestreet.com. “In the matter of a day”, Beijing has given Tesla, Ford, General Motors and the president himself “one awesome present”. As well as granting “a nice bottom-line boost to US carmakers”, China’s concessions “may have helped Donald Trump get re-elected”. Pull the other one, said Andrew Ross Sorkin in The New York Times. In fact, “the deal struck by the president who wrote The Art of the Deal doesn’t look too artful”. Trump has consistently demanded that China reduce its $375bn trade deficit with the US and end alleged state-backed intellectual property theft. There was no word about either in this deal. Moreover, as the Republican Senator Marco Rubio pointed out, the concessions that China did grant were “things they planned to do anyways”. The truth, he argued, is that “China is winning the negotiations”.
Trump’s efforts “to patch up trade relations with Beijing” have certainly opened up a can of worms on other fronts, said the FT. Rubio is leading a “revolt” against the ZTE decision among congressional Republicans. The EU, which still faces US steel and aluminium tariffs, will be concerned that Trump’s “face-saving” deal with China may “translate into competitive distortions against products from other countries”. Part of the problem for Trump is that it is difficult to negotiate when there is disagreement within your own team about the approach to take. The US treasury secretary, Steve Mnuchin, wants “a better investment regime for foreign corporations in China”; the White House’s hawkish trade adviser, Peter Navarro, by contrast, wants a lower trade deficit. Those two principal goals are “mutually contradictory”. Last weekend’s concessions “have delayed the threat of a trade war”. But the US is still “at odds with itself” over the goals of its trade talks with China.