US President Donald Trump loves to take victory laps, even tiny ones that go around a throw rug. Take the North American Free Trade Agreement. Trump suffers from severe autoimmune distress over anything that includes “free trade.”
Thus Trump tore up NAFTA and renegotiated a new United States-Mexico-Canada Agreement that required 13 months of effort, after which he proclaimed it as the best and most important trade deal ever made by the US.
Though tweaked around the edges, the two deals “are far more alike than they are different.” In other words, not such a big deal.
The just-concluded “first phase” of the US-China trade agreement, which took more than two years to reach a signing ceremony, deserves an even more dubious victory lap. Based on the information dribbling out of Washington, the deal seemed more cobbled together than reflecting two years of intense negotiation.
The Chinese side has very politely expressed hope that the signing of the first phase will lead to the resumption of free and open trade that existed before the trade war was initiated by the Trump White House.
What has the new trade agreement accomplished? Trump proclaimed that the deal is a win for the American middle class. But at his White House celebration of the agreement, he was surrounded by his multimillionaire donors and supporters. They are the true beneficiaries.
When Trump levied tariffs on imports from China to start the trade war, China reciprocated with tariffs on American imports. The end result was that Trump did not get his trade deficit with China reduced. Instead, the trade deficit stayed about the same as before the trade war.
But during the two-year war, American farmers sat on soybeans they couldn’t sell and had to depend on US$25 billion in subsidies from the federal government to stay solvent. The subsidy support wasn’t enough and farm bankruptcies surged by 24% in 2019 anyway.
Can American farmers sleep better at night now? Not really. The Phase 1 trade agreement is almost a version of one agreement, two countries, each according to its own interpretation.
Trump expects China to act as a command economy and commit to buying from the US to return to former levels of soybean import. China has established other suppliers now and insists that market forces will determine whom they will buy from and how much.
This means American farmers can no longer count on a predictable market for their harvest and without a stable and steady buyer, they can’t plant and avoid exposure to devastating financial losses due to “market forces.” Thanks to Trump’s trade war, gone are the good old days.
The first-phase trade agreement does not provide for a dispute-resolution mechanism involving a third impartial party. Basically, either party can walk away when they believe the other party is not living up to the agreement. It is in essence an agreement that can be cancelled for cause or no cause.
China generally does not enter such loosey-goosey agreements, but I believe it has done so in this case because it is making allowances for having to deal with Trump.
The Chinese know from experience and seeing how Trump operates that his word is not worth much. At any point that Trump no longer sees any need for a trade agreement, he could walk.
He needs a deal with China now to buttress his re-election prospects. If and when he is re-elected, who knows how China will figure in his political calculator at that time?
Unlike any of his predecessors, Trump does not know China, nor does he bother. His closest adviser on China is a guy who made up the pseudonym Ron Vara rearranged from the letters of his surname, Navarro.
Whenever Peter Navarro has some especially ludicrous statements to make about China, possibly too embarrassing to attribute to himself, he quotes Ron Vara.
Despite declaring China President Xi Jinping as his great friend, Trump shares no trust or common ground with which to build a relationship with China.
As Trump goes around the world promoting his vision of “America first,” he is telling everybody that they come last.
He has told South Korea and Japan to start paying the US for the expenses of keeping American troops in their countries. Literally protection money.
He has badgered the prime minister of Iraq for half of the oil output to reimburse the US for the cost of rebuilding after the American invasion and destruction of that country. Sort of like charging the family of the executed for the bullet used in the execution.
Except for Israeli Prime Minister Benjamin Netanyahu, Trump has no friends among world leaders. They snicker behind his back and wince at his fractured English. Donald J Trump even thinks J stands for genius.
And if you are perceived as an enemy of the US, look out, because President Trump has the divine right to send killer drones after you just to keep you from making nasty plans potentially harmful to Americans.
In the meantime, President Xi is going around the world promoting his vision of one world, one community, and making friends with the Belt & Road Initiative. This is the initiative to help trading nations improve their infrastructure and thus bring them closer to other trading nations.
The indefatigable US Secretary of State Mike Pompeo has been busy making the rounds bad-mouthing China’s BRI deals. When challenged as to what the US has to offer in China’s place, Pompeo’s empty-handed gesture is downright embarrassing.
A significant portion of the Chinese population is rooting for Trump to get re-elected. He has done such a terrific job of eroding America’s leadership and prestige around the world that he might as well finish the task in his second term.
Should Trump fail in his re-election bid and the Democrats take over, it will be well worth remembering that Trump’s approach to China was a total failure.
According to a Forbes article, 84% of the people in China trust their government. The US? Only 33%.
It will be useless and a waste of effort to try to convince the Chinese that they should be more like Americans. The democracy huggers in America had best direct their attention to fixing the dysfunction that is Washington.