May19

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The Trade War, Part I: China 1, Trump 0

When Donald Trump announced his "trade deal" with China—though that term may be overly generous—we decided to wait a week and to see what the response was from people who have greater expertise than we do on the subject of international trade. Well, it's been a week, and there's a near-universal consensus, from folks across the spectrum, that Trump is losing, bigly. Here are half a dozen excerpts from the various analyses we found:

• Imran Khalid, The Hill: "Far from a victory lap, the agreement reads as a reluctant American retreat from a tariff crusade that threatened to destabilize not just bilateral trade, but global economic equilibrium. It underscored a reality that many in Washington are reluctant to admit: Beijing has outplayed a belligerent but ultimately cornered Trump administration."
  
  
• Abraham Newman, Georgetown University, writing for MSNBC: "The word omnishambles—popularized in the British political satire The Thick of It—captures a particular type of policymaking characterized by chaos and mismanagement. We are just in the first episodes, but omnishambles is already the clear theme of this show. And while the U.S. has temporarily paused escalation with China, the risks to our economy and global credibility have already started."
  
  
• Editorial Board, The Wall Street Journal: "Rarely has an economic policy been repudiated as soundly, and as quickly, as President Trump's Liberation Day tariffs—and by Mr. Trump's own hand. Witness the agreement Monday morning to scale back his punitive tariffs on China—his second major retreat in less than a week. This is a win for economic reality, and for American prosperity."
  
  
• Heather Stewart, The Guardian: "Donald Trump will inevitably claim Monday's temporary truce in the US-China trade war as a victory, but financial markets seem to have read it for what it is—a capitulation."
  
  
• Kyle Chan, Princeton University, writing for The New York Times: "It doesn't matter that Washington and Beijing have reached an inconclusive and temporary truce in Mr. Trump's trade war. The U.S. president immediately claimed it as a win, but that only underlines the fundamental problem for the Trump administration and America: a shortsighted focus on inconsequential skirmishes as the larger war with China is being decisively lost."
  
  
• Max Boot, The Washington Post: "The trade deal with China might head off a looming, man-made recession but does nothing to achieve any of the ambitious objectives, such as reviving U.S. manufacturing or reducing the trade deficit, that Trump laid out for his trade war. (Of course he was unlikely to achieve those aims, no matter how long the higher tariffs lasted.) Little wonder that Hu Xijin, former editor of China's state-run Global Times, claimed 'victory,' writing, 'Today we have definitely driven the Americans back to the 38th parallel,' a reference to the border between Chinese-backed North Korea and U.S.-backed South Korea."

We found dozens and dozens of pieces like these. We also looked for folks who felt that Trump came out on top here, to see if there was a different way of seeing things, and... didn't have much luck. Here's one from that paragon of journalism, The New York Post, and that's pretty much it.

At this point, it seems pretty clear that the best-case scenario is the one that we (and others) have posited all along: The Trump team negotiates some small changes in trade relationships with various nations, Trump declares a win, and everyone moves on. This seems like a real possibility now, especially if it's true that Peter Navarro has been discredited (also, see below). Note that this is NOT to say that tariffs cannot work, or that China is not a bad actor, merely that Trump clearly has no idea how to utilize the former, and no idea how to neutralize the latter. (Z)