GREAT FALLS, MT - JULY 05: U.S. president Donald Trump speaks during a campaign rally at Four Seasons Arena on July 5, 2018 in Great Falls, Montana....
Justin Sullivan

In trade war, Trump doesn’t appear to know what he’s doing

Donald Trump’s trade war took a big step forward on Friday, with the White House announcing the imposition of tariffs against China, which were met with immediate retaliatory measures from Beijing. Ahead of the deadline, there was still some hope that China would satisfy the American president’s wishes, but there was no deal, and Trump followed through on his threat.

At the heart of the dispute is an awkward dynamic: no one seems to understand the administration’s demands, which makes it difficult for Chinese officials to try to make the Republican happy. Politico had a good piece a few weeks ago, noting that Beijing is “increasingly mystified about what Trump really wants,” convinced that the administration doesn’t really have a strategy.

“We appeal our American interlocutors to be credible and consistent,” Li Kexin, minister at the Chinese embassy in Washington, said in a recent speech – suggesting China sees Team Trump’s posture as neither credible nor consistent.

All of which sets the stage for a strange trade war that doesn’t appear to have a clear purpose, beyond reflecting the whims of an amateur president who doesn’t understand trade nearly as well as he thinks he does. The New York Times’ Paul Krugman explained the other day:

Trump’s tariffs are badly designed even from the point of view of someone who shares his crude mercantilist view of trade. In fact, the structure of his tariffs so far is designed to inflict maximum damage on the U.S. economy, for minimal gain. Foreign retaliation, by contrast, is far more sophisticated: unlike Trump, the Chinese and other targets of his trade wrath seem to have a clear idea of what they’re trying to accomplish. […]

Is there a strategy here? It’s hard to see one. There’s certainly no hint that the tariffs were designed to pressure China into accepting U.S. demands, since nobody can even figure out what, exactly, Trump wants from China in the first place.

China’s retaliation looks very different. It doesn’t completely eschew tariffs on intermediate goods, but it’s mostly on final goods. And it’s also driven by a clear political strategy of hurting Trump voters; the Chinese, unlike the Trumpies, know what they’re trying to accomplish:

Or put another way, one of the biggest flaws in Trump’s plan is that Trump doesn’t appear to know what he’s doing.

To be sure, we’ve been inching toward this point for a while. The Washington Post’s Catherine Rampell explained in May, in the midst of U.S./Chinese talks, “China knows what it wants out of these bilateral negotiations; the White House plainly does not. Trump officials have offered shifting and at times contradictory demands and objectives, further complicated by administration infighting, public turf wars, reversals, retractions and clumsy errors. In short: Over here on Team USA, it’s been amateur hour.”

Making matters slightly worse, no one can say with any confidence exactly how this trade war ends. Since the White House doesn’t have a clear strategy or end game in mind – usually those who launch trade wars make their specific demands clear – this dispute is likely to linger for a while.

Daniel Price, a former trade official in the Bush/Cheney administration, told the NYT last week, “There is no apparent plan. The administration has given no indication what the off-ramp is or what their objectives are.”

It’s reached the point that Chinese officials have turned to Wall Street and Washington insiders, initiating “back-channel conversations” in the hopes of gaining a better understanding of the president’s thinking, only to hear that they don’t understand Trump’s posture, either.

If you’re a family farmer in Iowa, afraid of losing your business because the administration has launched a war without a clear objective, the anxiety level is no doubt escalating by the day.

China, Donald Trump and Trade

In trade war, Trump doesn't appear to know what he's doing