Anxious US could use more trade tricks

The Donald Trump administration announced new tariffs on $200 billion worth of Chinese goods late on Monday even though US Secretary of Treasury Steven Mnuchin has invited China to a new round of talks later this month to settle the trade disputes. Why is the Trump administration still offering an olive branch to China while putting maximum pressure on it?

The US administration’s actions are inextricably linked to President Donald Trump’s “passive” position in US domestic politics. With less than 60 days to go, the US midterm elections are expected to be the fiercest in nearly two decades. Since Trump entered the White House, various US economic data have hit record highs, but the public still seems unhappy.

Trump’s approval rating has fallen from 43 percent in July to about 40 percent now. It could even be 39 percent, as some authoritative polls show. This is rare and could be a warning sign, as only former US president Harry Truman had an approval rating below 40 percent before the 1946 midterm elections.

What is most disquieting for the Trump administration is the dissatisfaction of voters in the Midwest and the suburbs. In fact, this is the main reason for the drop in Trump’s rating. Farmers in the Midwest, where pro-Trump voters are concentrated, have suffered huge losses because of the tariff war Trump has launched against many of the US’ trading partners, especially China. Since the key House of Representatives race for the midterm elections will also be held in the suburbs, his low approval rating has forced Trump to take some targeted actions to reverse the course.

Trump’s rating has declined also because some US elites and a large section of the public want to stop him from further poisoning the US’ political ecology. Trump’s actions and remarks over the past several months reflect the chaos within his administration and people’s increasing doubts over his governance ability which, combined with some other factors, have put him in a “passive” position.

Besides, the Trump administration’s recent efforts to impose high tariffs on more imports have failed to produce satisfactory results. In its negotiation with Mexico and Canada on the North American Free Trade Agreement, the Trump adminisits tration forced Mexico into submission and grant concessions to the US, but it failed to pressure Canada into making similar concessions.

In its trade conflict with China, too, the US has put increasing pressure on China to accept insatiable demands. China, however, has taken well-considered countermeasures which have not only defeated the US’ designs but also alienated some American businesspeople who earlier had supported the Trump administration in the hope of deriving some benefits for themselves.

With Trump’s approval rating going down, a full-fledged trade war will hurt more US industries and cause loss of jobs, and the resulting popular resentment against the US administration will lower his rating further. And since a trade war, if it breaks out, will not necessarily end before the November midterm elections, it will add to the uncertainties of Trump’s Republican Party.

After the US declared a tariff war against China, trade talks have been held off and on. So before participating in the Mnuchin-proposed talks, China should realize the process could be very arduous. Given that the Trump administration regards China as its “chief strategic competitor”, the US could possibly impose some conditions that could foil China’s long-term development plans.

The Trump administration may be in a difficult position at home, but its standing has not deteriorated to such an extent that it would offer China a genuine deal. Instead, it is more likely that the Trump administration will use the additional tariffs on $200 billion of Chinese products as a tool to pressure China into negotiating a deal in favor of the US.

Moreover, owing to their strained relations with Trump, some US media outlets could turn Sino-US trade and economic ties into a US domestic political topic, further complicating Sino-US trade ties.

A big fallout of the Trump-ignited tariff war is the formation of an anti-China force in the US, which loves to demonize China, and even spreads rumors that China is poised to withdraw from the world economy.

Despite all this, China should maintain its composure and continue making concerted efforts to overcome the temporary difficulties, strongly oppose protectionism, promote multilateral free trade under the auspices of the World Trade Organization, and deepen reform and opening-up.

With Trump’s approval rating going down, a full-fledged trade war will hurt more US industries and cause loss of jobs, and the resulting popular resentment against the US administration will lower his rating further.

The author is a researcher at the China Center for International Economic Exchanges.