Donald Trump made a name for himself by declaring “trade wars are good, and easy to win” in March 2018.
But a year and a half later, the U.S. president is stuck in an impasse on trade talks with China while his approval rating plunged to 38 percent at home amid fears that the U.S. economy is nearing a recession, according to an ABC News/Washington Post poll released earlier this month.
The poll shows 60 percent of respondents regarded a recession as likely next year, when Trump seeks to be re-elected as U.S. president. And 43 percent said Trump’s trade policies have raised the chances of a recession.
Business investment in the U.S. declined 6.1 percent in the second quarter — the biggest contraction since the first quarter of 2011. The U.S. manufacturing Purchasing Managers’ Index slipped to 49.1 percent (any reading below 50 indicates a contraction) in August, the lowest reading in more than three years.
In launching trade wars, Trump has promised to force U.S. companies to bring manufacturing back to America. The cruel fact is that manufacturing job gains in the U.S. have petered out in recent months.
U.S. businesses have found it infeasible to move their factories either to American soil or other countries. According to a Wall Street Journal report, U.S. companies simply cannot find in Vietnam the specialized, complete supply chains that made China the world factory. They have also found it very difficult to find factories with trustworthy safety certifications and capital-intensive machinery in Vietnam.
Industrial clusters cannot be created overnight, and the construction of infrastructure takes time and huge money. China’s full-fledged supply chains mean suppliers are close to each other, making manufacturing less costly and more efficient.
Trump has bragged that China is paying for the tariffs. The fact is, however, U.S. consumers are the ones who are paying. According to the ABC News/Washington Post poll, 60 percent of respondents said they were “more concerned” that the trade dispute with China will raise prices, and only 38 percent indicated they were “less concerned.”
U.S. businesses are also complaining. They pointed out that the Trump-initiated trade wars are disrupting supply chains, reducing American exports, raising material costs and delaying investment decisions. These also have dragged down global economic growth and made a global recession more likely.
Trump’s trade wars only saw the U.S. trade deficits widen, rather than narrow. In August, the U.S. trade and services deficits grew 8.6 percent from a year before, according to the Wall Street Journal.
Trump has only himself to blame for all these setbacks. The excessive demands made by Trump and his hawkish aides have led to a stall in trade talks since May. Now, it has become apparent that time is on China’s side. The U.S. needs a trade deal more than China does because of the increased likelihood of a recession and the 2020 election. And the pressure on Trump to strike a trade deal will rise as he gets closer to the 2020 campaign.
Trump has always touted himself as the ultimate dealmaker, and his 1987 part-autobiography “The Art of the Deal” was once a No. 1 best-seller. “I make good deals. That’s what I do. I would make great deals for our country,” he promised on the 2016 campaign trail.
However, he has apparently made missteps in the trade brawls with China and so far has proved to be a deal-breaker rather than a dealmaker. Even worse, he has demonstrated to the world that he is not a reliable, trustworthy counterparty in trade or political talks. He has a proven track record as an unpredictable, capricious and impulsive president.
Now, Trump might be coming to terms with reality. Last week he tweeted that the U.S. would postpone an increase on the tariff rate on US$250 billion of Chinese goods from Oct. 1 to Oct. 15. In response, China announced Friday it would exclude imports of U.S. soybeans, pork, and other farm goods from additional tariffs.
The goodwill gestures offer a temporary relief in the protracted trade war. However, Trump’s symbolic concessions announced last week are too little, too late. What he really needs to do is discard confrontational and bullying tactics.
The debacles that newly fired national security adviser John Bolton has brought to Trump’s foreign policy show how much damage a radical aide can bring to an administration. It is time for Trump to reconsider the service of his hawkish adviser Peter Navarro, who has pushed the president to force a dramatic decoupling from China.
If Trump wants to prove himself a genuine dealmaker, he should listen more to moderate and rational voices and take more positive actions to facilitate mutually beneficial talks with China.
(The author is head of the Shenzhen Daily News Desk.)