Trump maneuvers China into a strong position in the trade war

Jim Jones

It is apparently dawning on the president that the Chinese may well hold the key to his re-election in 2020.

Trump has painted himself into a corner in the trade war he started with China and he now has two unpalatable options--either cut a deal favorable to the Chinese, or double down and lose a bunch of his farm vote.

This all started with Trump’s meat-axe approach to unfair Chinese trade practices, primarily its pirating of American technology. Rather than rallying our allies to target the Chinese tech sector, the president set up a tariff wall against $250 billion worth of Chinese imports, many of which were not involved in the dispute. That has hurt American consumers and businesses as much or more than the Chinese.

It was predictable that the Chinese would retaliate against some of the most lucrative American exports, including America’s immensely productive agricultural sector. America’s farmers were caught directly in the crossfire. The Chinese knew this was a soft spot for Trump, due to his strong farm support in the 2016 election.

Farmers have sustained great economic injury as a result of Trump’s ill-conceived trade war. They have lost tens of billions of dollars in sales of soybeans and a wide array of other agricultural products, including many Idaho farm products. But the greatest injury has been the loss of markets that were painstakingly built up over the course of many years. Those markets may be lost to foreign agriculture producers for the long term.

Farmers have been giving the president the benefit of the doubt, hoping against hope that he has a long-term strategy that will benefit them and the rest of the economy. The problem is that bluster is no strategy at all. The president has been playing Candy Land, while the Chinese have been playing chess.

Trump did not understand that the Chinese government controls that country’s economy and it can sustain any amount of short-term monetary injury in order to achieve its long-term goals. By keeping the pressure on American farmers into the 2020 election, it might be able to achieve a regime change in America.

Or, it may be able to force Trump to back down and cut a sweetheart deal before the 2020 election. The Chinese leaders are undoubtedly aware that Trump has come to realize that he is in a trade box and must come up with some deal, any deal, that he can point to as a victory in order to stop the bleeding of America’s farm sector.

Trump has taken several actions lately that are designed to placate the Chinese--giving the Xi regime a pass on its brutal suppression of demonstrators in Hong Kong, holding up an arms sale to Taiwan that the Chinese government vehemently opposes, softly whimpering in opposition to the despotic treatment of the Uighur population in western China. These concessions are designed to get the Chinese re-engaged in trade talks and, hopefully, get them to put something on the table that will somewhat resemble a victory.

There is no question that the Chinese are in the catbird seat. They were maneuvered there by our president, who is now on the hot seat--either cut a deal that lets the Chinese largely off the hook for their trade piracy in the tech sector or face possible loss of the farm vote.

The President has been flailing around in search of a strategy. On July 30, he first demanded that the Chinese cut a deal before the 2020 election or suffer the consequences but conceded a few hours later that they might not. Two days later, he threatened to impose a 10% tariff on an additional $300 billion of Chinese imports. That would cost each U.S. household about $200 per year, in addition to the $830 per-year cost of his previous tariffs.

In response, China rattled world financial markets by devaluing its currency, showing that every nation stands to lose from Trump’s trade war. China announced on August 6 that it would stop buying American farm products and might impose retaliatory tariffs, which will further devastate American farmers, including Idaho dairies, wheat growers, orchard operators and other ag producers. The American Farm Bureau President called it a “body blow” to our farmers and ranchers. I hope that they can survive the machinations of the self-professed “Tariff Man.”

Jim Jones is a former Idaho attorney general and a former Idaho Supreme Court chief justice. His previous columns can be found at https://JJCommonTater.com.