Trump Lost the First Round of His Trade War With China
Donald Trump is waging a trade war on China. He once claimed that such a war would be “easy to win.” So far, it looks like he’s losing, chiefly because of internal conflicts within his party and the fact that the US media is fighting against him.
It is ironic that one of Trump’s most obvious vulnerabilities has nothing to do with China itself, or with the fact that some American companies are vulnerable to Beijing’s retaliation in a tit-for-tat trade war. The US president is losing credibility because the US political establishment, including the Republicans who hate him, is actively sabotaging his diplomatic efforts. The ZTE scandal is a prime example. Trump basically took the Chinese company hostage, trying to extract some concessions from the Chinese.
Given ZTE’s dependency on US technology, his actions brought the Chinese company to the brink of bankruptcy, forcing Xi Jinping to plead for Trump’s mercy. All was going well for Trump right until US lawmakers decided to throw a monkey wrench into his carefully orchestrated strategy.
NBC reported, “As the Trump administration reached a deal Friday to reduce sanctions on the Chinese telecom giant ZTE, Congress has shown rare unity in working to prevent the president from giving in to the foreign-backed company in a way that would compromise national security.” In simpler terms, Congress has shown rare unity in backstabbing Trump and making sure that no Chinese negotiator takes Trump seriously ever again. Bloomberg had reported that “a potential bill to prohibit ZTE Corp. and other Chinese telecommunications companies from operating in the U.S. would have supermajority support in Congress, Republican Senator Marco Rubio said.” If the president can’t ensure that the promises he makes to Beijing won’t be torpedoed by Congress, then why bother negotiating?
Another problem for the Trump administration is that the Chinese view his trade war as a direct threat to China’s national security and even dignity. Trump could have framed the contentious trade issues in a different manner, but it’s too late for that now because even media outlets like Caixin (the privately owned leading business newspaper in China) lambastes Trump for trying to force “a fundamental opening-up of the Chinese economy to the Washington free-market liberal reforms that China has steadfastly resisted,” adding that Trump’s trade war “is a new version of the Anglo-American opium wars of the 1840s using other means to open China.”
Any Sinologist would tell you that the Anglo-American opium wars were the most traumatic events in China’s history and that one of the core tenets of the implicit social contract between the people and the ruling Communist Party is that Chinese leaders must ensure that China never again experiences a new defeat of such magnitude and is never again subjected to the resulting national humiliation. If the dominant narrative on the trade war with the US is that it’s an “opium war 2.0,” then it makes any significant concession from the Chinese virtually impossible, because any significant concession would make Xi Jinping lose face and possibly even lose his political power.
Another casualty of the trade war, that’s not even finished yet, is Trump’s reputation or what’s left of it. His opponents are now viewing him as a pushover and as someone willing to sacrifice the national interest for the sake of a couple lucrative deals for his own business empire. Case in point: the recent Ivanka Trump scandal. According to The New York Times, “China this month awarded Ivanka Trump seven new trademarks across a broad collection of businesses, including books, housewares and cushions,” adding that “her growing portfolio of trademarks in China raises questions about whether Chinese officials are giving the Trump family extra consideration that they otherwise might not get.”
According to Time magazine, “a Chinese government-owned company had signed on to help build an Indonesian project that will include a Donald Trump-branded hotel and golf course.” Don Fox, the former general counsel of the U.S. Office of Government Ethics, told Time that “the Chinese knew exactly what they were investing in with the deal in Indonesia,” adding that “it also strains credulity that the president wasn’t aware of this when he made his favorable comments about ZTE.”
No matter what kind of deal is reached between Trump and Xi, any concession made by Trump will be inevitably viewed as a result of Chinese bribes. For Trump it is basically a no-win situation because he will inevitably have to make some concessions to the Chinese. His only hope is to score a gargantuan win, which will silence his critics, but looking at the interim results of the Sino-American trade war it is hard to see that as a probable scenario. So far, it is safe to assume that Trump has lost the first round of his trade war with China, and the best result he can hope for in the long run is nothing more than a stalemate.