Trump and China: Destined for Trade War No More
Next year could see a much needed strategic pause between the two nations.
Are the United States and China destined for war? Destined for a cold war? Or destined for a continuation of an often-chaotic status quo, meaning up and down tensions where the two sides continue to posture for hegemony in Asia and around the world? Listening to the rhetoric coming from both countries these days, trouble seems the only certainty.
Take, for example, the ongoing trade war that appears to have no end in sight. Click over to CNBC or Fox Business and, depending on the day, a trade deal looks imminent—or next to impossible. Markets, of course, respond accordingly.
Then there is Hong Kong. While Washington can do little to help the protesters in any meaningful way, Congress has nevertheless passed, and Trump has signed (although late on a Friday so it missed the primetime news cycle), a bill of support for Hong Kong’s freedom fighters. China, of course, responded quite strongly, prohibiting what have been standard port visits by the U.S. Navy to the former British colony.
And of course, there are the other impediments to U.S.-China relations that we have heard about for years and sometimes decades: the final status of Taiwan, tensions in the South China Sea, territorial disputes between Beijing and Tokyo in the East China Sea. Put all of these problems together—and combine them with the ongoing buildup and modernization of China’s military to wage a potential war against U.S. forces in Asia—and one has to assume the worst.
But this is where the domestic politics for both sides might save the day. For at least the next year or so, China and America have strong reasons to mitigate tensions, ensuring that no single issue destroys the relationship. Centering on the most important matter, trade, there is some hope for better days ahead—at least in the short run.
Consider America’s position. President Trump surely has incentives to push for what I would call a strategic pause in his quest to contain a rising China through tough trade moves. At the moment, staring down a possible vote on articles of impeachment and a Senate trial, rising trade tensions, which could reignite fears of a recession, are the last thing the president needs. When you factor in reelection worries, Trump needs to find a mutually agreeable solution to at least pause the trade war. Such a move will surely revive economic growth hurt by sanctions and ensure the smoothest possible path toward a second term. People vote with their wallets, and Trump gets that.
Chinese president Xi Jinping, meanwhile, has similar concerns. China’s 6 percent economic growth, something Washington can only dream of, is likely a number that exists only on paper, for Beijing is known to cook their books. With growth more than likely just barely in positive territory, thanks in large part to U.S. trade tariffs, and the challenges in Hong Kong not looking as if they will subside anytime soon, Xi needs to deliver what he can claim is a victory that also revives economic growth, at least for the time being. This will help stabilize China domestically, plus give Xi time to allow Hong Kong’s protests to burn out while not having to worry about economic troubles at the same time. Nothing could be worse for Xi than the markets concluding that China is in a recession with one of its prime economic centers now in open revolt. Just as quickly as China was dubbed the next rising superpower, her economic and political obituary could be written.
Here is where a so-called Phase One trade deal could help patch up the relationship and give both sides the short-term domestic boost their leaderships are looking for. A potential deal could involve China rolling back tariffs on all U.S. goods, agreeing to a large purchase of American agricultural goods, and providing basic protections on all U.S. intellectual property involving high-technology goods (think 5G, computers, and robotics). In turn, America would roll back all tariffs—something China wants very badly—including, and most importantly, agreeing not to launch the scheduled new round of massive tariffs on December 15, which are viewed as potentially the most damaging to date. While such an interim deal is far from perfect—China hawks will surely go ballistic, calling the deal nothing more than appeasement or select your other favorite neocon smear—Xi and Trump are pragmatic enough to see that a deal is in both sides’ interests.
But there are reasons to worry. A recent report in Axios claims that China is quite angry over Trump’s decision to sign the Hong Kong bill, and as a result talks between the two nations have “stalled.” Still, both sides have ample reasons to get a trade deal done. However, if Trump does indeed get reelected and China feels stable domestically once again, the pull of history—specifically, which nation will dominate geopolitics in the 21st century—may be too strong to resist.
Harry J. Kazianis is a senior director at the Center for the National Interest and the executive editor of The National Interest magazine.