The early results of the last few weeks of negotiations with China suggest that may have been overly optimistic. The logic was right. The United…
The early results of the last few weeks of negotiations with China suggest that may have been overly optimistic.
The logic was right. The United States runs huge and seemingly perpetual trade deficits with many of its largest trading partners. The U. S. is a necessary market for many of the world’s largest companies. This should give the U. S. bargaining power in negotiating more favorable trade agreements.
But just as in conventional war, winning a trade war requires leadership to marshal a national consensus to support the effort, resolve to withstand counter-attacks, and an ability to outwit one’s rivals.
At least in the early stages of the trade dispute with China, the Trump administration does not appear to be winning. The U. S. has agreed to push the pause button on threatened tariffs on China’s exports, while China has given up very little except vague promises to buy more U. S. goods and lift some tariff barriers on U. S. auto parts.
China shows no signs of relaxing its national plans to dominate high tech manufacturing by hook or by crook. China’s famous “Made in China 2025” and “China 2050” programs involve reducing its dependence on foreign imports and growing its domestic manufacturing sector, putting it squarely at odds with the Trump administration’s trade goals.
Even if it imports more U. S. soy, sorghum, natural gas, and shale oil, it will not come close to cutting its trade surplus with the U. S. by the $200 billion President Trump has said is his goal. In any case, China may be all too happy to allow the U. S. to become a supplier of energy and food, a sort of commodity-supplying colony to the Chinese manufacturing giant.
The recent ZTE debacle, with the U. S. threatening, then withdrawing, a devastating penalty on the Chinese company, has likely only redoubled the Chinese resolve to free its manufacturers from dependence on U. S.-made software and hardware.
A lot of what China appears to be agreeing to was probably inevitable. As China grows its urban population and manufacturing sector, its demand for agricultural imports will expand, the same with its demand for liquified natural gas, of which the U. S. is one of the top exporters in the world.
