President Trump’s tariff war hasn’t changed that, but it has brought China to the bargaining table for the first time. Those tariffs are hurting some U.S. businesses, especially farmers who relied on Chinese markets for their sales. But they are dramatically slowing the Chinese economy and have forced U.S. producers and consumers to look elsewhere for goods. Chinese economic growth has slowed to its lowest level in 30 years, and experts expect it to slow even more as U.S. tariffs start to bite even harder.
The Chinese government relies on extremely rapid growth to satisfy popular demand and create the wealth needed to finance its global ambitions. Even a reduction in growth to a level deemed high in the developed West — 3 to 4 percent — is insufficient to meet China’s needs. Reversing the slowdown is why the government is at the bargaining table and why removing tariffs is its primary demand.
That removal is not in the economic interest of the United States because tariffs are our only secure measure to enforce Chinese compliance with any deal it might strike. Any deal that has any hope of success must retain the U.S. president’s power to adjust tariffs upward if China starts to cheat on the deal. Without that lever, China could break its agreements and any future president would have to start all over again to push it to negotiations.
Nor would letting up on the tariff war be in the national security interest of the United States without serious changes in China’s behavior. Slow growth in China helps us because it starves the country of the resources that its government needs to fuel its military buildup and diplomatic initiatives. If Chinese growth were only 4 percent a year, the government would have to choose between satisfying its people and satisfying its military. If it chooses the latter path, internal demands for regime change would grow. If it chooses the former, China’s rise as a global power that threatens our security would slow. Either outcome is good for the United States.
The continued resilience of the U.S. economy means that Trump does not have to make a deal for domestic political purposes. While third-quarter growth did slow to 1.9 percent, the labor market remains white-hot. Unemployment is still at near-five-decade lows, and labor force participation continues to climb. The United States also still has economic tools it could deploy to boost growth, such as further interest rate cuts. Despite troubles in some sectors, the United States remains in the driver’s seat in the trade negotiations.
Business is eager for a deal because it wants certainty in the U.S.-China trade relationship. But the level of certainty it wants is not in U.S. national interests. The American laissez-faire approach to Chinese trade has strengthened a hostile global competitor and politically destabilized the United States because of the pressures of deindustrialization. A return to the past would only fuel both trends. Some American businesses might prosper, but the American people would face a more insecure economic and political future.
Tariffs are the only economic weapon China truly fears. Succumbing to Chinese and business pressure to discard them in the vain pursuit of an otherwise unenforceable deal is the economic equivalent of unilateral disarmament. Trump must resist that pressure and stay the course.