A Trade War Isn't a Real War

President Trump has a dangerous habit of justifying his trade policy on national-security grounds.

U.S. President Donald Trump holds a meeting on trade with members of Congress at the White House in Washington, U.S., February 13, 2018.  (REUTERS/Kevin Lamarque)

Since assuming the presidency, Donald Trump has dragged age-old protectionism out of the past. He has imposed new tariffs, blocked international mergers, and manipulated global trade—particularly U.S. trade with China. The two nations have become so enmeshed in this standoff, with China instituting tariffs and halting U.S. mergers of its own, that it has become common to suggest that the two nations have plunged into a full-scale “trade war.”

In such times, it’s helpful to remember that a trade war isn’t actual war. It is, at most, a rudimentary economic policy directed at a foreign government and its people. Nevertheless, President Trump has consistently explained his newfound protectionism—especially vis-à-vis China—on national-security grounds.

This should be confusing to an honest observer. When trade and commercial policies are routinely couched as national-security measures, the country finds itself on a perpetual pseudo-war footing. When the president justifies all his actions as necessary to keep America safe, the idea of actually acting to protect national security begins to lose its meaning. This is exactly the political conundrum the nation now faces.

Perhaps the most notable instance of President Trump justifying his economic actions in the name of national security was his decision to impose tariffs to help the U.S. steel and aluminum industries and “protect the American worker.” Trump, meanwhile, denounced the North Atlantic Free Trade Agreement as “a very bad deal” while tying his view to national security. He also promised to build a wall on America’s southern border to save the purported “hundreds of billions we spend year after year providing services and benefits to illegal immigrants”—seemingly an economic argument—while insisting that the U.S. military guard the border until the wall is complete—a national-security framing.

Trump has made it hard for the international community to tell whether he’s acting out of an earnest concern for national security or whether he’s motivated by base protectionism. And, frankly, it’s hard for the U.S. Congress, the courts, and the American people to tell, too.

Perhaps more unsettling, albeit less intuitive, is that Trump’s penchant for conflating national-security concerns with economic justifications may be even more of a problem when he actually has a plausible national-security basis for his trade policies. Last month, Trump halted the acquisition of Qualcomm, a leading U.S. chipmaker and cellular technology firm, by the Singapore-based Broadcom Limited. The proposed $117-billion hostile takeover would have given Broadcom, a major semiconductor firm, ownership of perhaps the world’s premier wireless communications technology firm in Qualcomm. The Trump administration was apparently worried that Broadcom’s cozy relationship with Chinese companies closely tied to Beijing would mean that the proposed Qualcomm acquisition would give China inordinate power in the global cellular technology market. Trump halted the deal through presidential proclamation, indicating that Broadcom, if allowed to purchase Qualcomm, “might take action that threatens to impair the national security of the United States.”

Here, Trump’s invocation of national security was plausible—convincing, even. In its review of the proposed Qualcomm deal, the Committee on Foreign Investment in the United States (CFIUS), an interagency board in the executive branch that conducts national-security assessments of commercial proposals, reportedly focused on the fact that Broadcom engages in joint-business ventures with Huawei, a powerful Chinese telecommunications and technology firm with close ties to the Chinese government. Putting Qualcomm in Broadcom’s hands could have given China immense influence in shaping the global telecommunications industry, from semiconductors to cellular chips to call transmissions.

China already plays a sizable role in setting standards for forthcoming wireless technologies like 5G—standards it could soon foist on the rest of the world, allowing it to promote industrial policies that favor its own state-sponsored products over those developed on the open market, as the Treasury Department emphasized in a letter to the lawyers trying to finalize the deal. An acquisition of a U.S. tech powerhouse by a foreign company could sap America’s long-term economic strength. It would also shift power to governments that don’t share its commitments to free expression and stifle competition by consolidating control of the critical semiconductor industry among an even smaller number of firms.

All told, President Trump, with CFIUS’s support, had what looked like a solid case for halting the Qualcomm deal on national-security grounds. But confusion about why he halted the deal ensued nonetheless. Congressional Democrats quickly admitted that they “don’t know the links between Broadcom and China” but nonetheless felt “unequivocally [that] President Trump and his administration made the right decision on blocking Broadcom from taking over Qualcomm.” (This was an uncertainty perhaps aggravated by the oblique language in Treasury’s public letter.) The Democrats thus praised Trump for halting the deal based on an undefined mix of national-security and economic concerns. Congress, like the rest of us, does not get to see the entirety of CFIUS’s work. But Congress, like the rest of us, has become numb to Trump’s insistence that his economic policy is, at every turn, driven by his concern for national security. So Congressional Democrats ultimately didn’t know quite what to make of this invocation of national security to drive trade policy, when that justification seemed plausible but overused.

There are numerous additional dangers to this inclination to invoke national security. Other countries will increasingly follow Washington’s lead by pointing to national security to justify a whole range of actions. China has already invoked supposed national-security concerns to demand intrusive terms from American companies seeking to operate in China—terms that those companies would never accept in the United States, like ensuring governmental access to individuals’ secure communications.

This tendency is also bad for U.S. credibility on trade policy generally. When, in the wake of the Qualcomm block, Washington proposed tariffs on a wide range of Chinese goods, including on the seemingly justifiable grounds of seeking to avoid the theft of trade secrets, Beijing was able to denounce Washington’s justification as, yet again, pretext.

Trump’s confusing stance on issues at the intersection of national security and commercial policy also makes it harder for U.S. companies to stand up for themselves. In May 2017, China passed a data-security regulation requiring that foreign firms intending to collect Chinese citizens’ personal data establish data farms in China, partner with Chinese firms to maintain the localized data, and cooperate with Chinese authorities should they wish to review even sensitive, personal data. It’s hard to imagine a more intrusive regulatory standard.

Yet Apple, seemingly worried about losing access to the Chinese market and its manufacturing base there, swiftly complied with Beijing’s demands. Given the Chinese regulation’s infringement on individual rights, much of the global community hoped that companies like Apple would resist. But, with Trump’s simultaneous invocations of national security as a pretext for protectionism, it’s hard for companies like Apple to contest similar excuses from foreign governments.

Going forward, the United States can regain its credibility both at home and abroad by restoring national-security justifications and trade reasoning to their respective spheres. This will require steering away from protectionism, especially when it’s pursued under the guise of national security, and back toward open investment and trade. Others have begun issuing a similar call on purely economic grounds—powerful ones on their own terms.

But it’s critical to issue that call on national-security grounds, too. There will be real threats to U.S. national security that demand invoking national-security concerns to halt transactions like the Qualcomm acquisition. The country needs the president’s credibility intact for those critical moments.