The trade talks may end. But the trade war will never die.
Robert Lighthizer, the U. S. trade representative, is no one’s idea of an optimist. He and Treasury Secretary Steven Mnuchin have been leading trade talks with China for the past several months and Lighthizer has been careful to point out there’s no guarantee of success. “If there’s a great deal to be gotten, we’ll get it —if not, we’ll find another plan,” Lighthizer told NPR recently. That’s a lot of ifs for the most important economic relationship in the world.
Pessimism won the day on Monday when Lighthizer and Mnuchin announced that the U. S. would execute President Donald Trump’s recent threat to raise tariffs on China once again. The punitive action in the midst of a negotiation was a departure from Trump’s generally optimistic tone about the talks, but it was a return to form for Lighthizer, an experienced negotiator with a reputation for brinksmanship. China, he believes, poses a grave danger to Americans’ way of life. Talks with China have been something of a moonshot for Lighthizer; an agreement that closes off vectors of illegitimate influence is difficult but, if a deal is reached, extremely valuable. And so despite the additional tariffs, the U. S. is not walking away from the talks yet, the negotiators said Monday. Chinese negotiators will arrive Thursday for more talks. But if the negotiations do fall through, Washington has already taken steps to ensure that China doesn’t get the upper hand.
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The China talks have a few main goals, according to Lighthizer’s public statements and media reports. They aim to reverse the decades-long build-up of global supply chains in China, which has made the country the destination of choice for businesses like Apple that manufacture and assemble high-tech products. The U. S. negotiators also want to put an end to a Chinese campaign to steal American know-how. They want to limit the support the Chinese government gives to the local private sector. And, critical to Trump, the talks seek to engage China to buy massive amounts of U. S. goods, including potentially soybeans and semiconductors. To get China to change its ways, the U. S. has imposed a series of escalating tariffs that now cover $250 billion worth of Chinese imports, out of a total of roughly $550 billion in annual imports from China. Most of those tariffs have been set at 10 percent; unless a last-minute agreement preempts the new policy, those rates will all rise to 25 percent on Friday. (Trump has said that China bears the cost of the tariffs. Studies have found that in practice American consumers bear the brunt.) The president can unilaterally impose tariffs under U. S. trade law, but doing so may violate America’s commitments at the World Trade Organization, where China has lodged a complaint.)
The trouble with the administration’s plans is that China doesn’t really want to do most of the things America wants it to, other than buying U. S. goods. (China was buying lots of American soybeans until Trump imposed his tariffs; Beijing switched to Brazil and other suppliers as punishment.) The Chinese Communist Party stays in power by giving its people an ever-growing promise of a better life. Changes to the country’s economic model are no small thing, especially when they’re demanded by outsiders. That means the United States needs to radically change the cost-benefit analysis of the party, and even billions of dollars worth of tariffs may not be enough to make that happen, although they do seem to be slowing Chinese economic growth.
