Let’s talk first about the smart way to confront China.
That would involve banding together with allies. And, in fact, lots of our allies have been asking for our help keeping China in line.
Yet we have, repeatedly, rebuffed such entreaties. Or worse: accepted and then reneged.
That includes the Trans-Pacific Partnership, a 12-country trade pact that we signed in 2016. The pact specifically excluded China to make sure it didn’t “write the rules of the road for trade in the 21st century,” as then-President Barack Obama put it.
Among Trump’s first actions as president, however, was to pull out of the deal.
As time goes on, this decision looks worse and worse, and not only because of the leverage lost over China. Two weeks ago the remaining 11 countries signed their own version of the pact, without us. That deal stripped out provisions the United States had fought for on behalf of American companies — including, somewhat ironically, increased intellectual property protections (in this case, for pharmaceuticals).
Another smart, multilaterally approved way to confront China would be through dispute proceedings at the World Trade Organization. The United States has been unusually successful there, but China hasn’t.
Some of the people around Trump, at least, seem to understand the value of such measures.
Last week, the incoming National Economic Council director, Larry Kudlow, said he’d like to see the United States and allies join forces against China in a “trade coalition of the willing” — which sounds an awful lot like the TPP.
And the White House did include pursuing WTO dispute settlements “in cooperation with other WTO members” in the actions it said will take over China’s intellectual property rights violations.
And yet, and yet. Trump clearly prefers, and emphasizes, the dumb way to deal with China.
This month, Trump announced new steel and aluminum tariffs.
The administration initially came out with guns blazing, declaring no exceptions whatsoever — even for the allies that actually produce most of our steel and aluminum imports. Over subsequent weeks, however, the administration exempted more and more countries from the once draconian-sounding measures.
First we shielded Canada and Mexico. Now, according to U.S. Trade Representative Robert E. Lighthizer’s Senate testimony on Thursday, we’ve given a reprieve to Europe, Australia, South Korea, Argentina and Brazil. China’s still in there, but it supplies only 2 percent of our steel imports.
Why did we pluck all the teeth from this supposedly fearsome policy?
Probably because allies, economists and even industry groups almost universally condemned it as likely to alienate friends, raise prices on U.S. consumers and destroy jobs in industries that either use these metals or might face retaliatory tariffs. Plus Republicans lost a special election in a deep-red Pennsylvania district that should have been especially sympathetic to steel tariffs.
If you thought all this meant Trump had learned his lesson, you’d be wrong.
In remarks ahead of signing the memorandum about the U.S. response to China’s intellectual property violations, he completely left out the memorandum’s directive to work through the WTO with our allies.
Instead, he called WTO proceedings “very unfair” and talked up tariffs, which the memorandum instructs the trade representative to soon propose. The White House says these will include about $60 billion worth targeting the Chinese aerospace, information communication technology and machinery industries.
Once again, these tariffs would be against the advice of economists and U.S. industry groups, such as the U.S. Chamber of Commerce. Once again, the announcement rattled markets, fearing that it could be the opening salvo of a trade war; China is reportedly preparing countermeasures against U.S. agricultural products, according to the Wall Street Journal. And once again, in acting unilaterally, the action will likely further alienate our allies.
Our best hope is that Trump doesn’t actually mean to follow through on these tariffs — or, alternatively, won’t notice if his own administration gradually walks them back.
Not exactly where you’d like U.S. global economic leadership to be.