Homenews

The truth about Trump’s Chinese trade war

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A New York Times report on Wednesday indicated that President Trump is not ready to let go of his grudge against China over North Korean policy.

According to the Times, sources with knowledge of the situation said the White House is currently planning to launch an investigation into China’s trade practices. The sources said the move was supposedly sparked by concerns over the country’s ongoing efforts to become a “global leader” in future technologies.

The decision to investigate one of the United States’ biggest trade partners follows weeks of building frustration in both Washington and Beijing over growing threats out of North Korea, which carried out two separate ICBM tests in July. Chinese officials have also expressed disappointment in the U.S. president’s Twitter habits, calling his recent claim that China was not doing enough to stop North Korea “emotional venting.”

“Trump is quite a personality, and he likes to tweet,” Xinhua, China’s state-run news agency, wrote in an editorial on Tuesday. “But emotional venting cannot become a guiding policy for solving the nuclear issue on the peninsula.”

Days earlier, Trump had tweeted that he was “disappointed in China” and complained that the country had not done enough to offset the billions they had made off trade deals over the years. “Our foolish past leaders have allowed them to make hundreds of billions of dollars a year in trade, yet they do NOTHING for us with North Korea, just talk,” he wrote. “We will no longer allow this to continue. China could easily solve this problem!”

Responding to Trump’s claim about Chinese inaction, Xinhua wrote, “What the peninsula needs is immediately stamping out the fire, not adding kindling or, even worse, pouring oil on the flames. [This could] evolve into a localized conflict, or even the outbreak of war, with unthinkable repercussions.”

Although Trump maintained a hard line on China during the election, he seemed prepared to offer a few concessions after taking office in January. In May, the two countries struck a deal that allowed the United States to export beef and natural gas to China. In return, China was allowed to sell cooked poultry to the United States and was given increased access to the U.S. banking system, according to NPR.

“It was pretty much a Herculean accomplishment to get this done. This is more than has been done in the whole history of U.S.-China relations on trade,” Commerce Secretary Wilbur Ross said at the time, praising the trade deal. “It’s a very big market. It’s at least a $2.5 billion market that’s being opened up for U.S. beef.”

In July, the two sides came together once more in an attempt to sway China into cutting its steel production; the meeting was largely a bust. In a statement afterward, Ross and Treasury Secretary Steven Mnuchin said that China had “acknowledged our shared objective to reduce the trade deficit which both sides will work cooperatively to achieve.” They added that further negotiations would continue in the future.

The new trade investigation could threaten any lingering hopes of reconciliation, at least for the time being. According to the Times, the process itself would be carried out by the Office of the United States Trade Representative and could take only a few months to complete. Depending on the outcome, officials could then impose tariffs on China or rescind business licenses as a punishment.

Not everyone believe this is actually possible. Robert Scott, a senior economist at the Economic Policy Institute, explains that the investigation is relatively pointless and ultimately out of Trump’s hands. “I think Trump genuinely wants to do something about China,” he says citing the steel talks as a legitimate course of action. Scott does not see the investigation, however, as productive.

The Times report specifically cites Section 301 of the 1974 Trade Act as a means of punishing China. In short, Section 301 allows U.S. officials to enforce trade agreements and resolve disputes; it also permits them to impose sanctions of offending countries who violate agreements or engage in unfair practices-in this case, China.

However, since 1995, the United States has been required to take all complaints to the World Trade Organization (WTO) before imposing any sort of tariff, Scott says. Trump would need to effectively plead his case before the WTO to get anything done. At that point, it would be out of his hands. “We gave up the right to file those sanctions ourselves [when we joined the WTO],” he explains.

Furthermore, he argues, if the Trump administration is hoping that an investigation and WTO petition will result in better cooperation from China on North Korea, it’s sorely mistaken. “It’s based nowhere in reality,” he says. The mainstream view seems to be that economic pressure on China simply doesn’t translate to a harder line on North Korea.

“In my view, the Chinese will scream, they’ll go to the WTO, they’ll take actions against U.S. companies and the U.S. government, but ultimately, it’s unrelated-it’s two separate issues,” he adds.

The Office of the United States Trade Representative declined to comment for this story; the White House did not immediately respond to a separate request for comment.

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