Efforts to strike back at Trump by China backfire on Beijing
WASHINGTON >> “When you strike at a king you must kill him,” Ralph Waldo Emerson once said. Well, this year China tried to strike at President Trump for daring to launch a trade war with Beijing — and missed the mark entirely.
After Trump imposed massive tariffs on Chinese goods earlier this year, Beijing responded in June with what appeared to be a clever strategy: targeting retaliatory tariffs against Trump voters in rural farming communities across the United States. China is the largest importer of U.S. soybeans, buying $14 billion of them in 2017. Three of the biggest soybean-producing states, Indiana, Missouri and North Dakota, not only voted for Trump, but also in the 2018 midterms had Democratic senators — Joe Donnell of Indiana, Claire McCaskill of Missouri and Heidi Heitkamp of North Dakota — who were up for re-election. If Beijing imposed painful tariffs on soybeans, Chinese leaders likely calculated, they could create a rift between Trump and rural voters who put him in the White House, give Senate Democrats a boost and force Trump to back down.
But Trump didn’t back down. He countered by announcing $12 billion in aid for farmers, threatened to increase his tariffs on Chinese goods and asked his rural base to stick with him while he faced down the economic predators in Beijing. That’s exactly what they did. Far from abandoning Trump, rural voters hurt by Chinese tariffs rallied around him and the GOP. They threw Donnelly, Heitkamp and McCaskill out of office, allowing Republicans to expand their Senate majority. And while Republicans lost control of the House, few of the GOP losses came from rural districts.
China’s tariff ploy didn’t just fail to sway the 2018 midterms; it actually backfired. The tariffs made the U.S. soybeans China depends on more expensive, and Beijing soon found that alternative suppliers in South America couldn’t produce enough to meet Chinese demand, leading to shortfalls.
That has emboldened Trump in his negotiations with Chinese President Xi Jinping — as shown by news last week that a senior executive of Chinese telecommunications giant Huawei had been arrested in Vancouver, at the request of the United States, on charges of violating sanctions on Iran. China demanded her release but nonetheless affirmed it will still observe the 90-day tariff cease-fire Trump and Xi reached during their recent meeting in Buenos Aires — putting off a scheduled Jan. 1 escalation of U.S. tariffs from 10 percent to 25 percent on $200 billion of Chinese goods while the two sides negotiate a deal.
Trump has leverage going into those talks. The U.S. economy is booming, while China has just posted its weakest growth in nearly a decade. Moreover, during the Group of 20 meeting in Argentina, Xi saw how Trump has been able to bend his trade rivals to his will, and deliver trade victories for his working-class political base.
China will of course be a much tougher adversary than Mexico or Canada. Lifting tariffs is easy. Getting China to change its entire industrial policy will be hard — as will stopping China’s theft of U.S. intellectual property.
Trump is playing a game of chicken with Xi, appearing to calculate that the United States is in a better position to survive an all-out trade war. The markets panicked last week over Trump’s recent pronouncement that he would be just as happy imposing tariffs as cutting a deal with China, but getting this message through to Xi is the only way to force his hand. As Trump tweeted last week, “We are either going to have a REAL DEAL with China, or no deal at all — at which point we will be charging major Tariffs against Chinese product being shipped into the United States,” adding, “remember … I am a Tariff Man.”
He means it. Trump actually believes tariffs are good for the U.S. economy. The question is whether Xi believes he believes it. The answer may determine whether we get a deal or a trade war.