Trump’s Trade War Was Futile

President Donald Trump promised yesterday that peace is at hand in his trade war upon China. “We have agreed to a very large Phase One Deal with China,” he tweeted at 10:25 a.m. “They have agreed to many structural changes and massive purchases of Agricultural Product, Energy, and Manufactured Goods, plus much more.” Beijing also announced that the two sides had reached an agreement.

Yet the first reports on the details suggest something less than a “very large” deal—it seems more a pause and truce. Still, the world will be spared the round of United States tariffs that were scheduled for December 15. By 2020, Trump's trade wars could cost the global economy $700 billion, the International Monetary Fund estimates. More tariffs would have cost more still.

Under the deal, China will increase some agricultural purchases from the United States, which it would have done anyway because the country is in the throes of a swine flu that has killed 100 million pigs and cut the country’s pork production in half. China has also made promises to improve its protection of intellectual property—something else that China was already doing anyway.

In other words, the United States gained little from the self-destructive trade war that Trump started. As the Bloomberg trade columnist David Fickling quipped on news of the deal: “It's a relief when a nation decides to stop punching itself in the face; how much better if it hadn’t started, though.”

Yet this latest Trump fiasco was for once something more than an individual quirk. Trump’s actions against China were supported by growing impetus among American conservatives to get tough on China, not only strategically, but economically too.

Melvyn P. Leffler: China isn’t the Soviet Union. Confusing the two is dangerous.

In October 2018, Vice President Mike Pence appeared at the Hudson Institute, a conservative Washington think tank, to place the Trump trade policy in context. Unlike Trump’s China statements, Pence’s speech was intellectually coherent and carefully worded.

Pence began by setting forth a problem: “China wants nothing less than to push the United States of America from the Western Pacific and attempt to prevent us from coming to the aid of our allies,” he said. Pence itemized U.S. grievances. He stated demands: “The United States wants Beijing to pursue trade policies that are free, fair, and reciprocal.” He outlined policy responses intended to constrain China and compel better behavior from it: stiffer rules on technology transfers, more U.S. military spending, and bilateral trade deals with other Asia-Pacific countries. Without even a twinkle of irony, Pence even praised investigative journalists who unearthed the financial secrets of corrupt authoritarians—so long, presumably, as they restricted their scope of work to Chinese corrupt authoritarians.

“It’s also great to see more journalists reporting the truth without fear or favor, digging deep to find where China is interfering in our society, and why,” Pence said. “And we hope that American and global news organizations will continue to join this effort on an increasing basis."

Pence’s words did not align with Trump-administration actions. Even as trade tensions crackled between the United States and China, Trump was picking trade fights with countries Pence had identified as potential trade allies—notably India in June 2019. The Peterson Institute for International Economics estimates that by mid-February of this year, Trump had imposed new restrictions on 12.6 percent of U.S. international trade. He had targeted not only China, but also the European Union, Canada, Mexico, and South Korea.

By the time Pence next spoke formally about China, this October, he did not have much good news to report. In the year since his last speech, Pence said, “Beijing has still not taken significant action to improve our economic relationship. And on many other issues we’ve raised, Beijing’s behavior has become even more aggressive and destabilizing.”

Persistent failure, however, has not caused a policy rethink. If anything, the administration’s allies have urged even tougher policies. On Tuesday, in a speech to the National Defense University, Senator Marco Rubio delivered a grim assessment. “The Chinese Communist Party,” he said, “has emerged as an immediate and growing threat to prosperity, our freedoms, and our security.” Rubio proposed a new industrial policy as a remedy, a new burst of state interventionism to encourage investment in critical sectors. Even Senator Mitt Romney, who has criticized Trump on so much else, has defended Trump’s anti-China tariffs as necessary to protect the U.S. economy.

Viewers of Fox News—the president first among them—have absorbed escalating messages of hostility to China. In October, Laura Ingraham called upon the United States to break its diplomatic and economic relations with China, saying, “I think we should cut ties with China across the board.” And here’s Tucker Carlson earlier this month:

I would say more broadly that what you see in the past 20 years is a systematic betrayal of America beginning with China’s admission into the WTO where our entire industrial sector collapsed. They became strong, we became weak, and a small number of people got rich doing it and they’ve never been punished for it, and they should be.

At the end of 2018, Lou Dobbs called for war upon China to punish Chinese hacking of U.S. computer systems. “I can’t understand why we wouldn’t go to war over this kind of monstrous theft,” he said. (Later in the segment, Dobbs said he would settle for a cold war rather than a shooting war, just so long as there was some kind of “confrontation.”)

But it’s not only Republicans who approve! The Democratic majority in the House of Representatives have agreed to a surge in U.S. defense spending to almost $750 billion, up $150 billion from President Barack Obama’s final year in office. This spending is justified above all as a response to Chinese ambitions, with special emphasis on expanding the U.S. Navy from 285 to 355 warships.

The presidential candidates Elizabeth Warren and Bernie Sanders have urged trade policies even more protectionist than Trump’s. When former Vice President Joe Biden tried in May to soothe Iowa Democrats’ fears of China, he drew Twitter fire from Sanders:

Since the China trade deal I voted against, America has lost over 3 million manufacturing jobs. It’s wrong to pretend that China isn’t one of our major economic competitors. When we are in the White House we will win that competition by fixing our trade policies.

Twenty-five-hundred years ago, the ancient Greek historian Thucydides explained the origins of the Peloponnesian War: “It was the rise of Athens and the fear that this instilled in Sparta that made war inevitable.” In 1916, President Woodrow Wilson explained the First World War in the same way: “Britain has the earth, and Germany wants it.” Are China and the United States doomed to repeat this tragic history in the 2020s?

In July, five international-relations scholars published an open letter pleading with U.S. policy makers not to treat China as an enemy. The former World Bank president Bob Zoellick has argued in public forums and op-eds, “You cannot contain China.” This past week, Fareed Zakaria published in Foreign Affairs the most fully realized critique to date of the Trump drive to trade war.

Zakaria, the host of CNN’s global public-affairs program “GPS,” scrutinized the Trump policy of confrontation with flinty realism. He predicted that the hawkish China policy advanced by leading Republicans will produce a “fractured, bifurcated international order, marked by government restrictions and taxes on trade, technology, and travel.” The result, Zakaria said, would be “diminished prosperity, persistent instability, and the real prospect of military conflict for all involved.”

Zakaria argues instead that while China’s internal behavior is bad and getting worse—horrifying attacks on religious minorities; violent repression of Hong Kong protesters—its external behavior remains much more responsible than Trump, Pence, and others acknowledge.

Peter Beinart: China isn’t cheating on trade

Nor are China’s trade practices anywhere near as bad as Trump, Pence, and Rubio allege them to be. “In a recent survey of such companies conducted by the U.S.-China Business Council,” Zakaria reports, “intellectual property protection ranked sixth on a list of pressing concerns, down from number two in 2014.” The improvements date to the creation by China of new judicial proceedings to protect intellectual property. Foreign companies have filed 68 complaints in the new courts and, Zakaria says, won all 68.

Zakaria contends that China has been inward-looking, concerned with protecting its regime against internal dissent and fractures. As the world’s second strongest economic power, China’s weight will inevitably be felt beyond its borders, as America’s is and most great powers’ are. Yet China’s power is most often exercised in ways that are defensive and reactive, not offensive and aggressive. China’s rise does not have to destabilize the international system.

Finally, China has grown too big to be moved by Trump-style unilateral U.S. pressure. Zakaria argues:

China is, by some measures, already the world’s largest economy. Within ten to 15 years, it will probably take this spot by all measures ... China will have to be given a place at the table and genuinely integrated into the structures of decision-making, or it will freelance and unilaterally create its own new structures and systems. China’s ascension to global power is the most significant new factor in the international system in centuries. It must be recognized as such.  

This last point seems especially cogent. At the start of the Cold War against the Soviet Union, the U.S. economy was probably three times larger than the Soviet economy. The odds looked even better when Soviet power was contrasted to that of the U.S. plus its closest allies—the United Kingdom, Canada, Australia, and the recovering economies of Western Europe. In 1985, the U.S.-led Western alliance produced half the planet’s output.

China presents a more formidable rival than the former Soviet Union ever was. Which means that allies matter more than ever to U.S. power. But unlike his predecessors in the age of the Soviet threat, Trump’s first move in his campaign against China was to sabotage the alliances that once enhanced U.S. leverage.

In his first week in office, Trump withdrew from the Trans-Pacific Partnership. TPP balanced Chinese economic power by joining Pacific Rim countries in a tighter system of rules and responsibilities. He proceeded to launch trade wars against Canada, Australia, the European Union, and the United Kingdom—alienating potential partners that could help the United States balance China. Trump threatened to blow up NAFTA, posing an existential threat to the Mexican economy. Mexico is also an important Pacific Rim country and a TPP signatory, lest we forget.

Trump first frightened South Korea by threatening to start a nuclear war on the Korean peninsula, then demanded it pay extra for American protection. He moved again and again to cancel the U.S.-Korea Free Trade Agreement. Along the way, he made the United States look ridiculous by announcing that he had sent “an armada, very powerful” toward North Korea—at the very moment when the main U.S. naval force in the Pacific was 3,500 miles away and pointing in the opposite direction.

Trump reneged on a refugee-resettlement deal with Australia, and even now is stressing U.S.-Australian relations by pressing the Australian prime minister to endorse conspiracy theories that Russia did not help him in the 2016 election.

Trump’s attack on world trade is pushing trade-dependent Japan into recession. Japan’s exports have been dropping all year, plunging 5 percent in the month of September alone. As exports dwindle, Japan’s economy sputters, growing at only 0.2 percent in the third quarter of 2019. Trust in the U.S. presidency has reached epic lows under Trump. While his approval ratings in the Asia-Pacific region are not quite so bad as in Europe, only 32 percent of Japanese and only 30 percent of Australians express confidence in him to do the right thing. Among Canadians, only 25 percent have confidence; among Mexicans, only 6 percent.

Michael Shulman: Things weren’t always this bad between the U.S. and China

Trump has done extra harm by refusing to take seriously climate change as an issue with China. The Pacific countries are even more alarmed by climate change than European allies. Again according to Pew, 60 percent of Australians, 66 percent of Canadians, 75 percent of Japanese, and 86 percent of South Koreans regard climate change as a major threat. These numbers have risen starkly since Pew’s previous survey in 2013. China is by far the world’s largest emitter of greenhouse gases, almost 30 percent of the planetary total, as compared with 16 percent for second-place United States.

As democracy once defined the global coalition against Soviet communism, so environmentalism could define the global coalition against China’s predatory economic model. Trump threw away that indispensable unifying message before his administration even started.  

Trump’s slogan of America First in practice translates to America Alone. In the 21st century, America Alone means China First, America Second. But America’s legacy of alliance-leadership offers a third way between Trump’s doomed unilateralism against China and the realistic accommodation of China that Zakaria proposes. The United States cannot impose its will on China. But it can work with others to write rules that China cannot afford to ignore. Trump’s “I order, you salute” model of leadership will end at best in failure and at worst in defeat. A return to the traditions of U.S. coalition-management—now infused with a new ethic of environmental stewardship—can extend the U.S.-led world order deep into this 21st century.