IE 11 is not supported. For an optimal experience visit our site on another browser.

Trump's confusion over China and trade causes new troubles

The problem is not just that Trump has dramatically escalated trade tensions with China; the problem is also that he doesn't know what he's talking about.
File photo taken in November 2017 shows U.S. President Donald Trump (and Chinese President Xi Jinping attending a welcome ceremony in Beijing.
File photo taken in November 2017 shows U.S. President Donald Trump (and Chinese President Xi Jinping attending a welcome ceremony in Beijing. 

With trade talks between the United States and China poised to enter a new phase, Donald Trump apparently decided it'd be wise to threaten Beijing with ridiculous new tariffs. Here was the American president's latest salvo, delivered via Twitter yesterday afternoon:

"For 10 months, China has been paying Tariffs to the USA of 25% on 50 Billion Dollars of High Tech, and 10% on 200 Billion Dollars of other goods. These payments are partially responsible for our great economic results."The 10% will go up to 25% on Friday. 325 Billions Dollars of additional goods sent to us by China remain untaxed, but will be shortly, at a rate of 25%. The Tariffs paid to the USA have had little impact on product cost, mostly borne by China. The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!"

Right off the bat, it's important to note that the Republican appears to still be struggling with the details of his own trade policy. China, for example, isn't paying those tariffs; consumers in the United States are. The idea that non-existent "payments" from Beijing are boosting the American economy is completely bonkers.

Trump added this morning, "The United States has been losing, for many years, 600 to 800 Billion Dollars a year on Trade. With China we lose 500 Billion Dollars."

No, actually, we don't. The American president continues to wildly exaggerate the size of our trade deficit with China, but just as importantly, Trump also doesn't yet grasp the fact that trade deficits are not evidence of money we've "lost."

Trump recently boasted, in reference to trade policy, "I understand that issue better than anybody." He later added, "I know every ingredient. I know every stat. I know it better than anybody knows it."

Oh, how I wish that were true.

But the larger significance of this goes beyond pointing and laughing at the American president's ignorance about one of his signature issues. In this case, Trump's confusion came with real consequences.

Specifically, the Republican's odd tweets sent international markets tumbling, and they simultaneously led Chinese trade negotiators to consider puling out of this week's talks altogether.

I understand the basic idea behind the American president's strategy: with the next round of negotiations scheduled to begin on Wednesday, Trump wanted to gain some kind of leverage, so he sent a shot across China's bow. The point was to effectively say, "Reach an agreement that I like or I'll start doing more harm."

But even if this escalation doesn't push Beijing away from the negotiating table, is Trump's strategy real? Was it done in consultation with U.S. trade officials? Does he intend to follow through with his threat -- later this week -- regardless of the consequences?

Or was this simply the latest in a series of poorly thought out bluffs?