Rather, as we look to 2020, it is the bellwether of Beijing to which we might want to turn our attention, as President Xi Jinping and the leadership of the Chinese Communist Party are deciding whether they prefer an erratic and antagonistic patsy to a relatively predictable but tough negotiator in the Oval Office. There is every reason to suppose that they might favor the former.
Many observers — myself included — agreed with at least some of the policy objectives outlined by the Trump administration with respect to trade and China. Specifically, there is broad support for the position that China’s engagement in a host of unfair trade practices needed to be challenged more firmly. Chinese practices such as dumping, currency manipulation, state subsidies, intellectual property theft and corporate espionage undermine the interests of American workers, farmers and entrepreneurs. It was time to mount a more determined challenge to those practices because they are unfair, and because they make the U.S.-China relationship unsustainable.
Trump has huffed and puffed about China. Indeed, as a member of Congress recently described it to me, the “China: bad!” message has been a consistent theme carried from his campaign into the White House. But while his bluster is intended to make us believe he is tough, his tactics have backed him — backed all of us, really — into a corner. He has already spent more than two times as much as the Obama auto bailout trying to ease the pain tariffs have caused to farmers. He has got enough problems heading into 2020 without the economic burdens of the trade and tariff war weighing down his reelection bid.
China, too, is feeling the strain of the Trump trade war. But it has two advantages: its own patience and Trump’s increasing desperation.
Trump needs the deal he tweeted about — even with quantitative easing from the Federal Reserve and new farm subsidies created to ease the bite of the tariffs, he knows (or at least those on his team know) that the economic pain cannot be indefinite without electoral consequence. Notwithstanding an ebullient stock market, those benefiting from market gains are concentrated at the top, while economic growth in the United States appears to be slowing, and the risk of a recession in the next 12 months remains.
The Chinese know that if they want to help Trump get reelected, one way is to give him the deal he must have. No need for troll farms and covert ops (don’t rule those out); the Chinese can significantly affect the election out in the open.
It would be misguided to accept the president’s blanket assurances that the deal is great, because it is unusual for a great deal to come out of a poor negotiating position.
What kind of deal are the Chinese likely to have offered Trump? It is probably okay for the United States in the short run, and good for China in the long run. To meet Trump’s needs, the deal needs to be one that he can crow about and that relieved Republicans in Congress can run on. The Chinese will want Trump to be able to crow about it. They know he is the kind of guy who will go around saying: “I love China, they love me. I got the best deal of any president ever.” And they know he will pay in quieter ways for the ability to be loud. (Perhaps those concessions will come in “phase two.”)
The concessions by the Chinese in the phase one deal appear only marginal and most likely time limited. Whatever they agreed to, the deal’s most significant immediate effects will be merely to cut tariffs to undo some of the damage done by Trump’s trade war in the first place. (Everything is relative.) The deal may give some real near-term relief to farmers who have borne the brunt of agricultural tariffs — perhaps a commitment to buy billions of dollars of U.S. agricultural goods, as Trump foreshadowed — and to consumers who are paying higher prices for Chinese goods. These things do matter, and Trump cares about achieving that (positive) impact. He knows it will strengthen his reelection bid.
But Trump does not care about what happens in two or three years; in contrast, for the Chinese, two or three years is a brief time to wait. So, like a mortgage with a short fixed-term and an exploding interest rate, the deal — or deals — that Trump is willing to make (and that the Chinese will proffer) most likely will offer short-term gain in exchange for long-term pain.
In diplomacy there’s an aphorism: “When negotiating, no deal is better than a bad deal.” Like so many other things in the Trump administration, that idea is turned upside down. The president doesn’t just like to brag about deals; he has created a situation in which he really needs one. So, for Trump, a bad deal is better than no deal — and the Chinese may have decided to give him just that.