Good news, no trade war; bad news, no strategy
M any of President Donald Trump’s supporters in the 2016 election have to be disappointed.
China, he had made clear during the campaign, was responsible for the factories closing, for wage stagnation, for America no longer being great.
In his 2015 book, “Crippled America: How to Make America Great Again,” which served as a prelude to his presidential run, Trump made his opinions of China clear.
“There are people who wish I wouldn’t refer to China as our enemy. But that’s exactly what they are,” Trump wrote. “They have destroyed entire industries by utilizing low-wage workers, cost us tens of thousands of jobs, spied on our businesses, stolen our technology, and have manipulated and devalued their currency, which makes importing our goods more expensive — and sometimes, impossible.”
On the campaign trail, Trump vowed that during his first 100 days in office he’d have China designated as a “currency manipulator,” allowing the Secretary of the Treasury to affix a 25 percent tariff on its imports. Good luck to them selling their stuff in America after that.
“They’re ripping us off folks. It’s time. I’m so happy they’re upset,” Trump said at an April 17, 2016, rally in Staten Island, N.Y.
Then he won the election and nothing happened. Trump did not name China as a currency manipulator. He has not sought to impose any tariffs. Reality, it appears, imposed itself. China hasn’t devalued its currency since 2014 and a trade war could well hurt us more than them. Trump didn’t pick a fight.
In fact, when Trump visited China last week, he came across more lap dog than attack dog.
“My feeling toward you is an incredibly warm one,” Trump told his host, Xi Jinping, leader of the largest authoritarian state in world history. “You are a very special man.” Take that. But what about them “ripping us off,” or their “rape (of) our country” with “the greatest theft in the history of the world?”
“I don’t blame China. After all, who can blame a country for taking advantage of another country for the benefit of its citizens?” he explained.
Left unexplained was how he plans to stop China from taking advantage.
It appears that factory in Michigan building widgets to replace those blocked by the tariffs on China won’t be opening anytime soon.
The good news is that the isolationist Trump of the campaign trail who threatened a trade war with China would have been bad news for the United States and the global economy. His make nice with China reversal, as distasteful as it may be to his base, has allowed the Trump administration to wheedle Xi to apply some additional pressure on North Korea in hopes of stopping the expansion of its nuclear missile program.
The feel-good visit included the announcement of $250 billion in business agreements between American and Chinese companies, though many of the deals are preliminary and will take years to play out.
“Quite frankly, in the grand scheme of a three-to-five hundred billion-dollar trade deficit, the things that have been achieved thus far are pretty small,” said Secretary of State Rex Tillerson in a fit of honesty.
In abandoning his get tough with China strategy, Trump has not provided a substitute policy. The region is moving on.
The 11 countries that negotiated the Trans-Pacific Partnership free trade pact with the United States, only to see Trump walk away from it once elected, have reached agreement on a new deal without the U.S. The nations aim to seal the deal early next year, with the pact taking effect in 2019.
As noted here before, abandoning the TPP, and hindering the ability of United States’ businesses to compete more fairly in the world’s most rapidly growing economic region, was a monumental mistake.
Trump has said he will instead seek one-on-one deals with individual countries that are more favorable to the United States. Unsurprisingly, none seems terribly interested. In any event, a hodgepodge of individual agreements is far less preferable than the mutual understanding of the rules that multilateral deals provide.
On the positive side, Trump’s economic foreign policy agenda has been less disastrous than feared. That’s small consolation, however. And it’s early yet.
In abandoning his get tough with China strategy, Trump has not provided a substitute policy. The region is moving on.