Trump’s flaws should not distract from the greater imperfections of US-China trade relations

Perhaps the best place to begin understanding why President Donald Trump’s administration is headed into a trade confrontation with Beijing is Robert Lighthizer’s testimony before the US-China Economic and Security Review Commission in 2010. Ambassador Lighthizer, now the US trade representative, provides much of the intellectual heft behind Trump’s attempt to fulfil what many see as his most important campaign promise – to stop the pillaging of the American economy by mercantilist Beijing. 

Lighthizer detailed how US policymakers and the public were told repeatedly by Bill Clinton’s administration that China’s accession to the World Trade Organisation would lead to significant economic and trade benefits for the US, how those promises largely didn’t come true, how they probably never could have come true given the fundamental incompatibility of China’s economic and political system with the West’s conception of the WTO, and how “US policymakers significantly misjudged the incentives for Western businesses to shift their operations to China and serve the US market from there”.

China has been waging a trade war on the US – the most open economy in the world, for more than four decades. Beijing’s state-directed world view is inimical to the democratic capitalist societies of the West and trade is one of several fronts Beijing uses to strengthen China in the hope of asserting its ideology beyond its shores. Trump, as imperfect as he may be, is the first American president to try to do something about it.

Using interesting legal bases, Trump has chosen a blunt approach of applying tariffs to Chinese goods coming into the US. His first, on steel and aluminium, are aimed at China’s overcapacity in those two industries and its consequent dumping of products that harms producers worldwide. While China’s direct steel and aluminium exports to the US appear small, more come through “transshipments” of Chinese products via other countries to disguise their origin. The real value, however, in the tariffs may be simply forcing the conversation about the problem in the US and among its allies. A second round of tariffs aim to punish Beijing for the ongoing lack of intellectual property protection that hurts American businesses. 

One can envision a few scenarios in the wake of Trump’s actions. Trump’s frequent use of the term “America First” is derided by those who say he is leading the US into isolation. But, like the initial announcement of tariffs, “America First” is being used to stake out a negotiating position. It’s impossible for the US to withdraw from today’s world.