Did Trump Get Owned by China?
Did Trump Get Owned by China?
China is better off than it was four years ago.
You wouldn’t think that at this stage of the Trump presidency—what with Clorox injections, gassing peaceful protesters, 160,000 dead Americans, hints at delaying the election, and on and on—Trump defenders could still be found. But they can. And I’ve noticed a theme in Trump defenses. “Say what you will about Trump,” they argue “at least he had the balls to take on China.”
Actually, no he didn’t. Let’s consider Trump’s record on China.
There are many good reasons to worry about China. With 1.4 billion people, an enormous military, and the world’s second-largest economy, China is beginning to throw its weight around. Unlike the old Soviet Union, which threatened American interests all over the globe but was hampered by a dysfunctional economic system, China is getting very rich very fast, while still maintaining one of the most repressive and cruel regimes in the world. China is racing forward on artificial intelligence and other technologies, and exporting its surveillance techniques to other despotic regimes. The long arm of Chinese repression has even been felt here, as Beijing strong-arms American companies to tiptoe around issues like Taiwan and Hong Kong.
So, Trump would have been right to be worried. But Trump’s perception of the China problem didn’t concern its threat to liberty. He was fixated on hair dryers and soybeans. Though many have tried to educate him, Trump remains convinced that because China has sold more physical products to us than we have sold to them, it is “raping” our country. (The concept of willing buyers and sellers eludes this businessman.) Previous American presidents had negotiated “grossly incompetent” trade deals, but his leadership, he promised, would reverse the trade deficits, bring manufacturing jobs back, and halt unfair trade practices like dumping, currency manipulation, and theft of intellectual property. It was all going to be so easy, he said: “We have the cards, we have a lot of power with China. . . . When China doesn’t want to fix the problem in North Korea, we say, ‘Sorry, folks, you gotta fix the problem.’”
None of those goals was achieved. None. Our bilateral trade deficit with China actually increased during Trump’s first two years, which, though Trump doesn’t understand this, was not bad for us, but was rather a side effect of our strong economy in those years.
Considering what Trump hoped to achieve vis-à-vis China, his first act, canceling the Trans-Pacific Partnership (TPP) treaty, was a monumental blunder.
Standing alone, the United States represents about 24 percent of the world economy. Together with the allies who signed the TPP—Australia, New Zealand, Japan, Malaysia, Singapore, Vietnam, Brunei, Canada, Mexico, Chile, and Peru—the trading bloc would have represented 40 percent of the world’s GDP. Though it isn’t clear that Trump knew this—he seemed confused about it during the debates—the TPP did not include China and would have made the free Pacific nations a bulwark against China’s unfair practices. We would have called the tune.
Had Trump really wanted to put China at a disadvantage, he would have built upon TPP by signing more free trade agreements with nations around the world. If the United States were to cooperate with the European Union, India, and Brazil, as well as the TPP nations, we could bring to bear the combined power of well over 75 percent of the world’s GDP.
But Trump thought that trade wars were “good and easy to win.” And so, he declared them . . . on everyone. “Tariffs! Bring me tariffs,” he told aides. And they brought them. Not just on China, but on our friends. In fact, he imposed more tariffs on Canada, Mexico, and the European Union than he did on China.
It turned out that unilateral tariffs were neither good nor easy. Trump’s image of the world is stuck at about 1970, when our economy bestrode the world like a colossus. We’re still the world’s leading economy, but not nearly so dominant. By 2018, we didn’t have the cards Trump thought we did. Americans had to pay higher prices for everything from bicycles to luggage to TVs to hats to industrial inputs. And China retaliated with tariffs of its own, hitting American farmers particularly hard. Moody’s Analytics estimates that the tariffs cost the United States 300,000 jobs along with $28 billion in taxes to subsidize farmers for lost customers.
Trump had promised that by punishing China he would revive the Midwest, but while Silicon Valley saw an increase in manufacturing jobs, Pennsylvania, Michigan, Ohio, and Wisconsin all lost factory jobs during his tenure. And, of course, today, due to his catastrophic mismanagement of the pandemic, every region of the country is in deep recession.
What about that “great trade deal” Trump negotiated with China? Hold the applause. The deal obliges China to purchase $200 billion in goods and services over the course of two years on top of the amounts imported in 2017. That may sound good, but China has a long history of failing to fulfill similar promises. Even at the White House ceremony announcing the deal, the Chinese vice premier said China would make its future purchasing decisions “based on market conditions,” which doesn’t inspire confidence. Also, by relying on China’s promise to make these purchases, Trump is making the U.S. more, not less dependent upon China, while disadvantaging other trading partners.
Worst of all, it ratifies the Chinese way of doing business—top-down command and control—rather than permitting markets to operate freely, which ought to be the U.S. goal, and was the model of the TPP (with some imperfections to be sure). And what if China reneges on the purchase commitment? The only enforcement mechanism is more unilateral tariffs, which, as we’ve just experienced, hurt the imposing country as much as or more than the target country.
As for forced technology transfers, intellectual property protection, and subsidies for favored domestic industries, the agreement contains a few small steps, but nothing substantial, which is why, as soon as the Phase I deal had been announced, the administration immediately began referencing a Phase II deal that would be right around the corner and would deal with all of the truly serious issues.
In return for this dubious “achievement,” Trump forfeited America’s role as champion of human rights and human dignity. Famously blistering toward our allies, Trump was obsequious toward President Xi, whom he called “a highly respected and powerful representative of his people” with whom he had “great chemistry.” When protesters filled the streets of Hong Kong demanding that China uphold its “One Nation, Two Systems” deal, Trump initially called them “rioters,” exactly the language the CCP used. Trump then praised Xi for his handling of the demonstrations, saying he could “stop them if he wanted to.” In November, 2019, when Congress was considering sanctions on China for its escalating repression of Hong Kong, Trump declined to say whether he would sign such a bill. “We have to stand with Hong Kong, but I’m also standing with President Xi. He’s a friend of mine, he’s an incredible guy.” Trump said he supported Hong Kong, “but we are also in the process of making the largest trade deal in history and if we could do that it would be great.”
John Bolton recounts that Mr. Tough-on-China pleaded with Xi to buy more American soybeans and wheat to help him win re-election, and also that Trump gave Xi the green light to put a million Uighurs in concentration camps. Bolton says that Trump told Xi, “You’re doing exactly the right thing.”
Amazingly enough, Trump has not been able to snap his fingers and force China to bring North Korea to heel. His own fervid courtship of Kim Jong-un also yielded worse than nothing.
China is a malign power whose prestige and influence has only increased during Trump’s tenure. While America has been threatening to withdraw troops from Japan and South Korea, halting military exercises with South Korea, imposing tariffs, and demanding huge increases in payments for military bases from our allies, China has been steadily investing through its Belt and Road Initiative, and asserting its military might in the South China Sea. A survey of NGOs in Southeast Asia taken just before the pandemic found that 96 percent predicted China would be an economic power in the region in 10 years compared with only 56 percent who said the same about the United States.
China’s looming ascent represents a challenge to American world leadership. We can and should respond by playing to our strengths: improving existing alliances, leading world institutions like the WTO and WHO instead of demonizing them or withdrawing, encouraging free trade, standing up for civil liberties, welcoming talented students and immigrants who can help us maintain our technological edge (and who, until the advent of Trump, still made America their first choice), and getting our own fiscal house in order so that we do not need to borrow from China.
Trump’s trade war was an expensive bust. But it wasn’t nearly as costly as his abdication of American leadership and betrayal of American values.