Will President Trump succeed where his predecessors have failed? On Thursday the president announced measures aimed at China, including tariffs on up to $60 billion in Chinese goods, possible restrictions on Chinese investment in the United States and a case against China at the World Trade Organization. That the president would reach for the blunt instrument of tariffs against China is no surprise; it’s certainly easier and more satisfying, emotionally, than tackling homegrown factors in the U.S. trade deficit, such as the structural budget deficits his tax cuts will worsen. He promised tariffs in the 2016 campaign and on March 8 he threatened a separate, globally applicable set of tariffs on steel and aluminum. Nor is it a surprise that China would threaten to fight back, with tariffs on such U.S. products as soybeans.
The pessimistic view of this — apparently prevalent on Wall Street on Thursday — is that Mr. Trump has started a growth-killing trade war. Given China’s strategic commitment to mercantilism, and its one-party state’s power to impose sacrifice on the Chinese people, you’d have to say pessimism is plausible: “If people want to play tough, we will play tough with them and see who will last longer,” China’s ambassador to the United States warned. A more hopeful view, though, is that Mr. Trump’s action is a shock to the system, which might stimulate serious negotiations with the Chinese. The measures Mr. Trump announced do not go into effect immediately, leaving time for talks. Notably, the administration has decided to grant its allies in Europe, Asia and elsewhere exemptions to the March 8 steel tariffs, pending negotiations — a limited but welcome show of pragmatism.
Ultimately, though, much depends on Mr. Trump’s ability to recognize there are benefits as well as costs to the economic relationship with China, and to formulate a strategy that maximizes the former while minimizing the latter. At times, he has spoken as if tariffs are a means to an end — “fair” trade. At other times, however, he has suggested that he, like Beijing’s leaders, regards protection as an end in itself. At some point soon, he must articulate clear and reasonable objectives, regarding both China and the allies — and then be willing to take “yes” for an answer.