Is the United States looking for a fight or a deal? That’s the fundamental question that a mystified Chinese scholar and former government official posed to me when we met recently in Washington, D.C., as the scholar wrapped up a fact-finding mission to the U.S. capital in the heat of an escalating trade war between the world’s largest economies.
On Tuesday—fresh off signing a revised trade agreement with South Korea and announcing another with Canada and Mexico, both spurred along by the specter of U.S. tariffs—Donald Trump suggested that it’s a deal he’s after. “We’re … fixing decades of disastrous trade deals that have plundered our factories and stolen our wealth and our jobs,” the president told electrical contractors in Philadelphia. “China has been taking out of our country $500 billion a year, and it was time to stop. Nobody ever did it. It’s crazy … We’re going to have a great relationship with China, but we have to be fair to ourselves also.”
In truth, however, Trump’s endgame with China may not actually be establishing a fairer trading relationship. There’s a popular perception that Trump is “building leverage” with the tariffs he’s imposed on billions of dollars’ worth of Chinese goods and “trying to make a deal,” noted Ely Ratner, a China expert at the Center for a New American Security and former Obama administration official, during a panel moderated by James Fallows at The Atlantic Festival on Wednesday. But for certain officials in the Trump administration, “there is no deal. The tariffs are the end point.”
This faction includes not just prominent protectionist-minded trade advisers like Peter Navarro, but also “sophisticated strategic thinkers” at places like the Defense Department and National Security Council, Ratner said. And they are aiming to do nothing less than “decouple” the U.S. and Chinese economies so that American technologies and industries are less susceptible to Chinese theft and coercion. They believe “the vulnerabilities associated with being overly interdependent with China is a problem in and of itself,” Ratner explained. “I think the debate [within the administration] is over the extent of that decoupling. I think it’s very unlikely that we get a deal and this whole thing goes away.”
Amy Celico, who leads the China team at the Albright Stonebridge Group, said her clients are growing wise to, and worried about, these decoupling objectives. She recounted one conversation with corporate executives who asked, “Are the Trump administration’s tariff policies meant to punish China’s bad behavior on intellectual-property theft, or punish us for having global supply chains” that include China?
The way Trump tells it, the United States is currently engaged in a long-overdue reckoning with China over its predatory trade practices that would never have come about had he not been elected president. But both Celico and Ratner told a markedly different story. Celico argued that it was Hu Jintao, Chinese President Xi Jinping’s predecessor, who first stoked trade tensions between the countries by restricting foreign involvement in the Chinese market and contravening commitments China made in joining the World Trade Organization in 2002. Ratner traced the conflict to the rule of Xi, who took office in 2012 and has centralized power at home and boldly pursued China’s interests abroad ever since. Ratner characterized Trump as “mostly an irrelevant figure” in the standoff Xi has precipitated, claiming that a Hillary Clinton administration would have also adopted a more confrontational approach to China even if that approach might have looked different from Trump’s.
“We are at the most challenging point in U.S.-China relations in about 30 years,” since the two countries fell out over the Chinese government’s brutal crackdown on protesters in Tiananmen Square in 1989, Celico said. There is a palpable sense in both Beijing and Washington that “this state of heightened tensions” is “going to be a new normal,” and the Trump administration may be acting out of the conviction that “if we don’t stand up to China now, we won’t be able to fight this even stronger country” later.
This profound structural friction—greater than any particular leader, be it Hu Jintao or Xi Jinping or Donald Trump—was vividly on display last week at the United Nations General Assembly, during which UN Secretary-General António Guterres urged world leaders to take seriously the threat of war between a rising China and ruling America and seek to avert it. In previewing Trump’s address to the United Nations, in which the U.S. president condemned China’s trade policies, National-Security Adviser John Bolton acknowledged that what was at stake was far larger than “tariffs and the terms of trade.” It was, rather, “a question of power,” since practices such as intellectual-property theft have “a major impact on China’s economic capacity and therefore on its military capacity … I think all of this goes to what will be the major theme of the 21st century, which is how China and the United States get along.”
Days later, a festive reception at the Chinese embassy in Washington, D.C., turned tense when China’s ambassador gave a speech calling for “cooperation” rather than “confrontation” between the two superpowers, only for Matt Pottinger, one of Trump’s top Asia advisers, to deliver a much sharper message. “In the United States, competition is not a four-letter word,” Pottinger told the crowd. “We in the Trump administration have updated our China policy to bring the concept of competition to the forefront.”
For decades, U.S. policy makers engaged China in the hope that there would be increasing overlap in the Venn diagram of what the two countries want in the world, Ratner reflected. And for decades that was more or less true. But “where we’re headed right now is actually a null set,” he continued. From Taiwan to the South China Sea to an ideological competition over America’s model of capitalist democracy and China’s model of authoritarian capitalism, whatever convergence of strategic interests once existed is now disappearing.
Celico jumped in to note one remaining point of overlap. “Neither side wants to go to war,” she observed.