China tried to strike at Trump

The Record (Troy, NY) - - FRONT PAGE - Marc A. Thiessen Columnist Fol­low Marc A. Thiessen on Twit­ter, @marc­thiessen.

“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 Don­nelly (Ind.), Claire McCaskill (Mo.) and Heidi Heitkamp (N.D.), who were up for re­elec­tion. 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 did not 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 is ex­actly what they did. Far from aban­don­ing the pres­i­dent, ru­ral vot­ers hurt by Chi­nese tar­iffs ral­lied around Trump 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. Com­pet­i­tive ru­ral dis­tricts mostly ended up stay­ing Repub­li­can; it was the ur­ban-sub­ur­ban dis­tricts that flipped to the Democrats.

China’s tar­iff ploy didn’t just fail to sway the 2018 midterms; it ac­tu­ally back­fired. The tar­iffs made the U.S. soy­beans that China de­pends on more ex­pen­sive, and Bei­jing soon found that al­ter­na­tive sup­pli­ers in South Amer­ica could not pro­duce enough to meet Chi­nese de­mand, lead­ing to short­falls.

In other words, China went for a kill shot — and ended up shoot­ing it­self in the foot.

That has em­bold­ened Trump in his ne­go­ti­a­tions with Chi­nese Pres­i­dent Xi Jin­ping — as shown by news this 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 that it will still ob­serve the 90day tar­iff cease-fire Trump and Xi reached dur­ing their meet­ing last week 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 work­ing­class po­lit­i­cal base, when he held an elab­o­rate sign­ing cer­e­mony for the new U.S.-Mex­ico-Canada trade agree­ment.

China will of course be a much tougher ad­ver­sary than Mex­ico or Canada. As my Amer­i­can En­ter­prise In­sti­tute col­league Derek Scis­sors points out, the Chi­nese Com­mu­nist Party con­trols the econ­omy through state own­er­ship and mas­sive sub­si­dies in dozens of sec­tors where U.S. goods and ser­vices can’t com­pete fairly. 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.

But Trump knows that he has no chance of do­ing so by fil­ing com­plaints with the World Trade Or­ga­ni­za­tion. So 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 this 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 this 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 that 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.

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