A long-term trade war with China now looks plausible. Trump hiked tariffs to 25 percent on $200 billion of Chinese goods on Friday. Monday morning, China announced it will retaliate with new tariffs on $60 billion of U.S. goods.
If this does continue, Trump’s lie about China paying us billions in tariffs will become ever more imperative for him.
That’s why it’s such a big deal that Fox News’s Chris Wallace debunked this falsehood by getting economic adviser Larry Kudlow to admit that China is not paying the tariffs. In fact, they amount to a tax on U.S. consumers:
But this lie is not a mere superficial sign of Trump’s failure to understand how trade works. Rather, it’s becoming central to the political strategy he’ll employ if we see protracted trade hostilities.
Trump is in a jam on trade
Trump’s trade war has put him in a jam. Revamping trade with China was a central campaign promise. But if Trump agrees to a deal that does not win real concessions, that will reveal his agenda of “toughness” as hollow — particularly if those concessions do not appear worth the pain that the tariff wars have already imposed on farmers, in the very region that’s crucial to his reelection.
So the New York Times reports that Trump is now hoping to flip the political calculus: No deal, followed by still more tariffs, will allow Trump to proclaim he’s still being tough on China. Incredibly, the Times reports that Trump apparently believes this will be a political winner even if increased tariffs impose still more economic pain.
Here’s where Trump’s lie comes in
How is this possible? Enter Trump’s lie. The new, convoluted story he’s telling is basically that the money we “take” from China in tariffs will be given to farmers in exchange for their products, which we will then export to other countries that need them.
There are three possible resolutions here, as The Post’s Heather Long explains. We could end up with no deal and a full-blown trade war. We could end up with a bad deal — U.S. companies don’t get improved access to expanding Chinese markets and many tariffs remain. Or we could get a good deal — an end to unfair Chinese trade practices, access to Chinese markets and real enforcement mechanisms.
The lie that China is paying us tariffs will be necessary if one of the first two scenarios happens. The third could still happen, but even if it does, Trump’s lie is still just that — a lie — and it’s obviously central to his backup plan.
Trump’s narrative about China, repurposed
Notably, this backup plan repurposes the story that Trump has told about China for years: that China is robbing U.S. workers blind. Throughout 2015 and 2016, he claimed that China is “ripping us off” and is our “economic enemy,” targeting us with the “greatest theft in the history of the world.”
It’s true that China is a bad international actor and that Trump did tap into real grievances about globalization. But as Paul Krugman notes in the New York Times, Trump hasn’t built an international coalition against China’s abuses. Instead, he’s waging trade wars on multiple fronts, alienating allies, so the one with China is better seen as an outgrowth of his desire to tear down the international trading order.
In this regard, go back and watch Trump’s closing 2016 ad. It depicts a shadowy globalist plot, via imagery of George Soros (hint, hint), Asian business executives, Democratic politicians and Chinese sweatshop labor. The story: Globalist elites are enriching themselves by pitting foreign low-wage workers against U.S. workers. (The better answer to this story is the progressive trade agenda, which includes international wage and labor standards and real investments in displaced workers.)
Some observers look at Trump’s trade wars and still manage to see hints of his supposed economic populism, in which Trump vowed to defy GOP economic orthodoxy. But, given that Trump has gone all in with GOP plutocracy on taxes and shredding the safety net while punting on infrastructure — three areas where he’d supposedly defy that orthodoxy — the real story is obvious. Trump’s “economic” populism remains operative only in areas that satisfy his xenophobic nationalist impulse to exaggeratedly attack other countries as enemies hellbent on fleecing us — immigration and trade.
Indeed, it’s no accident that Trump also vowed to make Mexico “pay” for his border wall, to punish Mexico for “sending” us their outcasts and pitting them against U.S. workers, similar to his claim about China.
Central to this whole tale has always been the idea that Trump will take back for U.S. workers what this alliance of elites and foreign workers is stealing from them — he will take back what is rightfully theirs.
Given all this, failure on China could be catastrophic for Trump. So he’s just swapping in a new story: He’s making China pay restitution to Americans it has ripped off for so long by forcing it to “pay” us in tariffs.