Risky trade negotiations with China

The history of U.S. trade with China in the post-World War II era is a story of negotiations complicated by seemingly unrelated but critically important issues.

The history of U.S. trade with China is a story of negotiations complicated by critically important issues.

The Cold War, North Korea’s nuclear program, Iran’s ambitions, the 2008 financial crisis and concerns over global warming all have created pressure at different times and during different trade talks, so it is perhaps unfair to criticize the decisions of U.S. leaders to let China “kill us,” in the words of President Trump.

Trump used those words in his June 2015 presidential campaign announcement speech to describe China’s successes against the U.S.

“We have all the cards, but we don’t know how to use them,” he said then. “We don’t even know that we have the cards, because our leaders don’t understand the game.

“We could turn off that spigot by charging them tax until they behave properly.”

Trump went on to discuss China’s “very scary” military buildup. “You have a problem with ISIS,” he said. “You have a bigger problem with China.”

Although the speech is remembered for Trump’s inflammatory comments about illegal immigration, it was mostly about trade and why the future president believed it was time to get tough with U.S. trading partners. Now, we’re there. White House trade and economic adviser Peter Navarro said Trump initiated a yearlong investigation of China’s “structural practices which are designed to capture our technology and our innovation base.”

Navarro said the U.S. is up against “forced technology transfer, counterfeiting and other forms of intellectual property theft, cyberintrusions to American business, our chronically undervalued currency, state-directed investment aimed at the U.S. technology base, large-scale subsidies to China’s stateowned enterprises, and high tariff and nontariff barriers.”

Rejecting the milder approach of Commerce Secretary Wilbur Ross and Treasury Secretary Steven Mnuchin, Trump has put U.S Trade Representative Robert Lighthizer in charge of the next round of talks with China.

“We have finally got their attention,” Navarro said.

He said what got China’s attention was the imposition of tariffs, initially on $50 billion worth of China’s exports to the U.S. and more recently up to $250 billion.

Beijing has retaliated with tariffs including a 40 percent tax on U.S. auto exports.

The threat to ratchet the tariffs even higher was apparently defused last weekend at a face-to-face meeting between Trump and China’s President Xi Jinping at the G-20 summit in Buenos Aires.

Navarro said it was “extraordinary to have the president of China himself at that dinner spend the first 30 to 45 minutes laying out the parameters in detail of a deal — that’s never really happened in the history of the U.S.-China relationship.”

In the aftermath of the summit, disparities emerged over exactly what was agreed upon and on what precise timetable, but there is general agreement that there will be a 90-day truce in the trade war during which the U.S. and China will not increase tariffs any further. China’s commerce ministry put out a statement calling the talks a “great success” and saying it would implement the specific issues agreed to “as soon as possible.”

By imposing painful tariffs, President Trump is inviting domestic criticism and political damage in order to pressure China to address the “structural issues” that have strengthened China at the expense of the U.S. for many decades.

It’s exactly what he promised to do, and if it works, he will deserve the credit.

Ultimately, Americans should root for an outcome which avoids further tensions and facilitates further trade.