Trump’s China trade flip-flops heighten risks

The Morning Call - - NATION & WORLD - By Paul Wiseman and Joe Mc­don­ald

WASH­ING­TON — U.S. tar­iffs on Chi­nese goods are go­ing up. Wait, Pres­i­dent Don­ald Trump says he’s hav­ing sec­ond thoughts. No, no, Trump may ac­tu­ally raise tar­iffs even higher. He’s also de­mand­ing that U.S. com­pa­nies leave China. Well, maybe not.

The com­mu­ni­ca­tions on China from Trump and his ad­min­is­tra­tion since late last week — er­ratic, some­times con­tra­dic­tory — are com­pli­cat­ing their high­stakes talks with Bei­jing and el­e­vat­ing the risks to the frag­ile global econ­omy.

The mes­sag­ing has been con­fus­ing not just for Chi­nese of­fi­cials as they for­mu­late a re­sponse to what­ever stance the ad­min­is­tra­tion is tak­ing. It’s also a prob­lem for Amer­i­can busi­nesses. Trump alarmed U.S. com­pa­nies on Fri­day by threat­en­ing to in­voke his pres­i­den­tial au­thor­ity to or­der them out of China — a mar­ket of 1.4 bil­lion where many Amer­i­can com­pa­nies have spent decades es­tab­lish­ing op­er­a­tions and build­ing re­la­tion­ships with sup­pli­ers and cus­tomers.

The shift­ing po­si­tions and threats could even­tu­ally weaken the U.S. and world economies by leav­ing busi­nesses par­a­lyzed by un­cer­tainty over whether and where to sit­u­ate fac­to­ries, buy sup­plies and sell prod­ucts.

“We are on Mr. Trump’s Wild Ride,” said Jay Fore­man, CEO of Basic Fun, a toy com­pany in Boca Ra­ton, Florida, that im­ports from China. “Never have we ever ex­pe­ri­enced such an un­hinged prac­tice of gov­er­nance.”

Speaking Mon­day at the Group of Seven sum­mit in Biar­ritz, France, Trump was un­apolo­getic.

“Sorry — it’s the way I ne­go­ti­ate,” he said, adding, “It has done very well for me over the years, and it is go­ing very well for the coun­try.”

Ne­go­ti­at­ing a trade deal with China was al­ways bound to be con­tentious and sub­ject to fits and starts.

“Trump’s con­tra­dic­tory state­ments and er­ratic de­ci­sion-mak­ing re­flect the fact that he is an undis­ci­plined, tac­ti­cal thinker who deals with is­sues and events one-by-one and is guided by no fixed prin­ci­ples or long-term strate­gic vi­sion,” said Jeff Moon, a for­mer U.S. diplo­mat and trade of­fi­cial spe­cial­iz­ing in China who is now pres­i­dent of China Moon Strate­gies.

Bei­jing’s ne­go­tia­tors are re­luc­tant to make com­mit­ments in the face of what they see as Trump’s shift­ing de­mands, say econ­o­mists and busi­ness­peo­ple.

Af­ter talks be­tween the two sides col­lapsed in May, Trump ac­cused Bei­jing of back­track­ing on its of­fers of reg­u­la­tory changes and mar­ket-open­ing steps. An­a­lysts sug­gested that Bei­jing was loath to make com­mit­ments with­out know­ing whether the U.S. would soon make new de­mands.

“This con­stant flip-flop def­i­nitely makes it very hard for the other side to fig­ure out what the Amer­i­can gov­ern­ment ac­tu­ally wants,” said Jo­erg Wut­tke, pres­i­dent of the Euro­pean Union Cham­ber of Com­merce in China, which rep­re­sents 1,600 com­pa­nies.

Chi­nese ne­go­tia­tors might be los­ing faith in Trump’s will­ing­ness to make a deal and stick to it, agreed Tu Xin­quan, di­rec­tor of the China In­sti­tute for WTO Stud­ies at the Univer­sity of In­ter­na­tional Busi­ness and Eco­nomics in Bei­jing.

“We used to have ex­pec­ta­tions for Trump,” Tu said. “We hoped he was a busi­ness­man, more ra­tional and less en­tan­gled in po­lit­i­cal is­sues. But now it seems his de­gree of ra­tio­nal­ity is far be­low our ex­pec­ta­tions. Con­stantly chang­ing. The over­all sit­u­a­tion is get­ting worse. Sim­ply put, we have no ex­pec­ta­tions now and don’t ex­pect him to make the right re­sponses and de­ci­sions.”

In the mean­time, Trump’s tar­iffs against Bei­jing and the un­cer­tainty sur­round­ing them are trou­bling U.S. busi­nesses that have built com­plex sup­ply chains in China or that rely on Chi­nese im­ports. Their wor­ries are one rea­son U.S. busi­nesses’ cap­i­tal in­vest­ment fell in the April-June quar­ter for the first time in three years.

WANG ZHAO/GETTY-AFP

An­a­lysts say Pres­i­dent Trump’s trade war with China is hold­ing back busi­nesses from plan­ning growth.

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