President Trump described the trade deal he struck with Xi Jinping, the Chinese president, over the weekend as “incredible” and a BIG leap forward!” No wonder. The president said China had agreed to increased purchases of American farm products and even the removal of all tariffs on American cars, a remarkable concession given the current duties of 40 percent.
The one problem? Xi and his Chinese colleagues offered a different version of the dinner meeting during the G-20 summit. They resisted the notion that American and Chinese negotiators had set a 90-day deadline for filling in the details of an agreement. Thus, they may have been surprised to read that Peter Navarro, a Trump trade adviser, told Politico the administration expected China to make “structural changes” in those three months.
By Tuesday, the president added to the confusion with tweets that returned to earlier threats about increasing the tariffs he applied to $200 billion in Chinese goods from 10 percent to 25 percent. “I am Tariff man,” he reminded. The Dow Jones industrial average then dropped nearly 800 points, and continued sinking when trading opened on Thursday before recovering some ground. Investors no longer seem comforted by a dinner that suggested cooler heads had prevailed.
No doubt, a similar anxiety returned to Ohio soybean farmers. In 2017, soybeans were the top American agricultural export to China. Since the tariff war triggered by the president, Chinese purchases are down 97 percent.
Will the apparent truce endure, let alone produce results? The president appeared to be making a productive retreat only to revive doubts about where he is headed.
What hasn’t changed is the need for a better strategy to take advantage of what the president has achieved. He has gotten the attention of Xi and other Chinese leaders. Yet he overlooks that an improved approach remains linked to what is the American advantage: this country’s trading partners, many formal allies, who share the same frustration with China.
The Chinese transgressions long have been familiar. They involve such things as forcing technology transfers as the price of doing business, pilfering intellectual property, doling heavy subsidies to state-owned and domestic industries, plus cyberhacking and more traditional barriers to imports. The idea isn’t to change the Chinese system in a fundamental way. They get to choose how their economy is structured. Yet they also chose to play by the shared rules of global trade.
The challenge is achieving much greater compliance. Actually, that was one leading purpose of the Trans-Pacific Partnership, the United States joining 11 other nations in a trade agreement, in part, to put economic pressure on China. Unfortunately, the president withdrew from the pact, claiming the country could do better on its own. Yet that just isn’t the case in view of the combined leverage these and other trading partners could apply.
More, the president has strained relations with many allies, to the benefit of China.
The expectation isn’t that the Chinese will succumb suddenly, or that exposure to a market-driven global economy will alter soon its ways. This is a long slog, of five, 10 or 20 years, to bring steady change. That requires American leadership at the front, rallying countries to uphold and adapt the rules, to see the shared stakes. That explains the air of hope when the president appeared to recalculate his position in the form of a short truce. Then, confusion followed.