The difficulty of this task appears to be what drew Lighthizer into the administration in the first place. He was headed for a comfortable semiretirement, Dan DiMicco, a former steel CEO who put Lighthizer’s name forward during the transition, told me last year. Lighthizer has long seen China’s economic overtures to be a kind of Trojan horse. “Its leaders view economics the same way they view defense, foreign policy or human rights. It is a means of expanding the power of the state and maintaining control of its population,” Lighthizer wrote in a 1999 essay inveighing against President Bill Clinton’s plan to bring China into the WTO, through which it could trade with the West on more favorable terms. “We have all the leverage in the world if only we are willing to use it,” he wrote a few years later. Using that leverage against China became Lighthizer’s personal and professional mission. Now that the China talks have hit a low point, the question to ask is whether a man who spent decades preparing for this moment is unprepared for it.
A crucial moment for the talks came in April, when Mnuchin said that the U.S. and China had “pretty much agreed” to create a mechanism to enforce the deal. That announcement aimed to resolve a lingering problem. The U.S. wants the deal to effect real changes. But why would China ever agree to let the United States punish it unilaterally? The answer, as Mnuchin explained: Both sides would agree to let the other police the deal. The trouble with that plan is that it cuts against everything Lighthizer and his hawkish allies believe about America’s role in the global economy. In their telling, China has been plundering the American economy since at least its entry into the WTO, in 2001. Letting China monitor the U.S. would be something of an insult to the American workers the negotiators say they’re defending. “Nothing known about the Trump administration’s enforcement strategy should give anyone confidence that satisfactory enforcement is possible,” wrote the economist Alan Tonelson in April. “Decades of experience should by now have clearly taught the lesson that, at least under the present Chinese regime, mutually beneficial economic ties were never possible.”
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Lighthizer may well have persuaded Trump to act out a bluff as a way of forcing concessions. But even if he isn’t, and the talks really are in trouble, the U.S. has already taken steps to limit its perceived vulnerabilities to China. It has sent a loud message that companies with Chinese supply chains need to consider their business strategies. The iPhone supplier Foxconn is building plants outside China, the Financial Times reports. The administration’s still-unratified NAFTA replacement deal includes a provision limiting Mexico and Canada’s ability to do deals with China. And speaking of Mexico, business is booming because of the trade war. After the U.S. put tariffs on silk yarn from China, Mexico’s exports to the U.S. jumped up from “almost nothing” as China’s fell, Bloomberg reports. Congress has newly empowered a national-security committee, known as CFIUS, that vets incoming investment into the U.S. As a result, “as many as a dozen China-linked firms have scaled back their US investment programs, some dramatically,” report Recode and Vox. The United States has also enforced a legal blockade on the WTO, refusing to allow the appointment of new appellate judges who might find against American interests.