It had all the makings of a burgeoning trade war. Donald Trump announced plans for significant new tariffs in March, which prompted China to announce a related counter-move. The American president upped the ante, and Beijing responded in kind.
Yesterday, the White House changed direction in dramatic fashion.
The Trump administration has suspended its plan to impose sweeping tariffs on China as it presses forward with trade talks, a gesture that will temporarily ease tensions between the two nations but rapidly increase pressure on President Trump to secure the type of tough deal that he has long said is necessary to protect American workers.Steven Mnuchin, the Treasury secretary, said on Sunday that the two countries had made progress as they concluded three days of intense trade negotiations in Washington late last week. The planned tariffs on as much as $150 billion worth of Chinese goods are off the table while the talks proceed, he said."We're putting the trade war on hold," Mr. Mnuchin said on "Fox News Sunday."
The Treasury secretary apparently believes a halt in the president's plans is justified because China offered some vague assurances about buying more American products -- an agreement that even Trump allies conceded was weak and far short of what the White House wanted.
And yet, there was Mnuchin yesterday, putting new tariffs "on hold."
The Brookings Institution's David Wessel told NPR this morning, "The Trump administration didn't really have a strategy, certainly didn't have a unified negotiating position and basically asked the Chinese for unilateral disarmament, got rejected and folded."
To be sure, I was highly skeptical of the value of Trump's plan for a trade war and there was no reason to believe it would have succeeded. That said, after the president's chest thumping and public posturing, it's hard to deny that his latest retreat is embarrassing.
At least in theory, Trump's threat was intended to give him some leverage. U.S. negotiators could tell Beijing to make concessions during their trade talks or the White House would move forward with the president's proposed tariffs. Now, however, Trump World is giving up this leverage in exchange for practically nothing.
Worse, the larger pattern puts the White House in an especially unflattering light. Trump, eager to appear "tough," said after his election that he was prepared to walk away from our "One China" policy. Chinese officials weren't pleased, and Trump quickly backed down.
The American president also vowed to label China a currency manipulator, right before he retreated on this, too.
The Trump administration was cracking down on ZTE after it did business with Iran and North Korea, lied about it, and created a domestic security threat. After stating his concerns for Chinese jobs, Trump backed down on this, too.
Why does this matter? A few reasons, starting with the fact that the American president, who fancies himself a world-class negotiator and deal-maker, appears to be very bad at bluffing.
There's also the fact that Trump, for all of his bravado, is weaker than he likes to admit. As CNBC's John Harwood noted last week, "Facing powerful adversaries, the tough-talking president usually shrinks from a fight."
And finally there's the impression the American president is giving our rivals in Beijing. As regular readers know, in the early months of his presidency, Trump repeatedly embarrassed himself with China, to the point that the American president became the subject of mockery in China's state-run media. One headline in April 2017 read, "Trump slaps self in face, again."
The Republican looks like even more of a paper tiger now.