The Trump administration is supposed to be negotiating with China. But right now it more often seems to be negotiating with itself.
China knows what it wants out of these bilateral negotiations; the White House plainly does not. Trump officials have offered shifting and at times contradictory demands and objectives, further complicated by administration infighting, public turf wars, reversals, retractions and clumsy errors.
In short: Over here on Team USA, it’s been amateur hour.
On Friday, for instance, National Economic Council Director Larry Kudlow told reporters that China had offered to reduce the U.S. trade deficit by “at least” $200 billion.
That would be an astonishing figure, as it would comprise more than half of our entire goods deficit with China.
Not surprisingly, the Chinese foreign ministry spokesman flatly denied that China had offered this number. And the next day, when the White House released its joint communique with China on the negotiations, the statement mentioned only “a consensus on taking effective measures to substantially reduce the United States trade deficit in goods with China.”
No actual figures were included, certainly not $200 billion.
So how did Kudlow respond when confronted with these developments?
On ABC’s “This Week,” he denied that he’d ever touted an agreement on the $200 billion figure, saying that it was just “a number that interests the president a lot.”
This is hardly the only time the administration has been confused about the facts, or its own position.
On Sunday, Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer offered somewhat mixed messages on what was expected to happen with tariffs going forward. Mnuchin said the United States was “putting the trade war on hold”; Lighthizer emphasized that tariffs remain on the table.
In Beijing earlier this month, divisions between the free-trader and protectionist wings of the U.S. delegation exploded, with the White House trade adviser Peter Navarro reportedly shouting and cursing at Mnuchin after being excluded from a meeting.
Trump himself is not exactly helping to make the administration’s message more coherent.
A month ago, the Commerce Department imposed harsh penalties on Chinese telecom giant ZTE, which U.S. officials determined had not complied with a previous settlement over illicit sales to Iran and North Korea. Trump’s FBI director, the nation’s top counterintelligence official and the Defense Department have likewise warned that ZTE phones may pose a cybersecurity threat.
But then this past week, Trump bizarrely declared that he was hoping to reverse these U.S. actions. “Too many jobs in China lost,” Trump tweeted. “Commerce Department has been instructed to get it done!”
In subsequent days, Trump and his underlings have offered muddled and at times contradictory guidance about the motivation behind this change of heart, and what actual policy adjustments it might entail.
More broadly, this administration often doesn’t seem to realize that its stated goals regarding China are at some level schizophrenic, if not mutually exclusive.
The administration has said it wants better investment terms for U.S. companies in China, for instance, which means that U.S. multinational companies would be more likely to move more of their supply chains to China. It would also lead more capital to flow from the United States to China. As the Financial Times’s Lucy Hornby points out, these developments would be at odds with Trump’s goal of reducing our goods trade deficit with China.
So why can’t the administration get its act together? Why do officials keep publicly undermining themselves and their colleagues?
At core, the problem is that Trump’s trade agenda is deeply confused, which enables cacophony and cattiness.
During the 2016 election, Trump was obsessed with the idea that our trade deals were “unfair,” part of his broader campaign message attempting to scapegoat foreigners for all the nation’s ills.
Trump’s evidence was that we had a big trade deficit, which meant we were “losing.” Deficits, however, are not inherently bad, nor necessarily a sign of “unfair” trade. They’re a function of lots of other broader macroeconomic factors, like savings and investment.
But no matter.
All Trump understood was that voters liked the story he was telling. So rather than taking the time to learn about our actual complaints regarding China’s trade policy (primarily, intellectual property theft), or how we could deal with them (through multilateral pressure, such as the Trans-Pacific Partnership that Trump killed), Trump fixated on deficits. The part of the story that sold with the public.
Meanwhile, the people in charge of executing Trump’s trade policy became prisoners of Trump’s fairy tale, doomed to try to solve a problem that doesn’t exist rather than the one that does.