• Monthly
  • $25
  • $50
  • $100
  • $other
  • use PayPal

ONE WEEK TO DOUBLE YOUR DONATION!

We are inching along, but not as quickly as we (or you) would like. If you have already donated, thank you so much. If you haven’t had a chance, consider skipping the coffee this week and drop CounterPunch $5 or more. We provide our content for free, but it costs us a lot to do so. Every dollar counts.
FacebookTwitterRedditEmail

Trump’s Trade War With China: Is It About to End?

Container ship, Columbia River. Photo: Jeffrey St. Clair.

The latest de-escalation of the trade war with China — with exemptions from some tariffs on both sides — has left markets uncertain as to whether it will end before there is serious escalation. But if I were managing a hedge fund, I would bet on it.

To see why, we must start with Trump himself. Distraction is Trump’s modus operandi; this was true for his 2016 campaign and he must have concluded from its success that this was also the best way to govern. Trump’s trade wars are therefore best understood as a set of distractions. The end result doesn’t matter all that much to him politically, and is therefore not worth that much political risk.

Of course there are things that some of his donors might actually want to win from this fight with China: stricter enforcement of patents to benefit the pharmaceutical giants who also gouge American consumers out of hundreds of billions of dollars annually; or greater access for US bankers to China’s financial sector. But Trump’s main goal at this point is to get reelected. And the bulk of his big donors — including the biggest contributors to the Republican Party ― don’t want this fight to drag on.

Who else does Trump care about? Trump is practically unique among political leaders in the world in that, among the electorate, he has directed his energies almost exclusively at his hardcore base. Even most dictators will generally try to expand their base by reaching out to people outside of it in their speeches and actions. But Trump has not; possibly because he has been concerned about the threat of impeachment. His hard-core base has been seen as the main force that keeps Republicans — especially the 20 of 53 Senate Republicans needed to convict him if he were impeached — from betraying him.

Even now, with the House having initiated an impeachment inquiry, it appears that this base is what Trump and his allies are counting on to protect him and get him reelected.

And Trump’s base does not care all that much about his fight with China. If he makes a deal and declares victory without gaining anything significant, as happened e.g., with Mexico and the European Union — there is little reason to suspect that he would get any more trouble from his base than he got in those episodes. Especially since he is not even fighting for things that might benefit them. If he succeeds, for example, in getting China to reduce the conditions that it imposes on US firms investing there — such as sharing their technology — this would only encourage more US corporations to move their production from the US to China.

Finally, there is no sizable political opposition force — most importantly Trump’s 2020 opponents — that is likely to gain significant political advantage by attacking Trump for his failure to “win” anything in this trade war with China.

There is also some political risk for Trump in continuing this trade war. Because of the visible damage it’s causing, he could get blamed for various negative economic outcomes that may occur before the presidential election. This could happen because of various events and how they are interpreted. For example, the US stock market is overvalued and could fall sharply at any time; this could be blamed on Trump’s trade war, and although the stock market is not the economy — far from it — it is sometimes treated as such by much of the media.

The actual impact of the trade war on the US economy has been somewhat exaggerated, although there is no doubt that some sectors have been hurt — e.g., farmers hit by China’s retaliatory tariffs. US goods exports to China are less than 0.6 percent of US GDP, and they have fallen by 18 percent from last year. That adds up to about one-tenth of 1 percent of GDP. There are other costs of the trade war that are more difficult to measure, such as reduced investment and economic activity because of the uncertainty caused by trade wars with unpredictable results. But it is difficult to see this trade war tipping the US economy into recession.

Still, if there is a recession or serious slowdown before the election, Trump’s trade war with China will likely increase the blame that he gets for any downturn. The incumbent president is often held responsible (or takes credit when it is good) for the state of the economy.

For all of these reasons and more, it’s likely that Trump is preparing to end this distraction and move on to the next one. We can only hope that it’s not something more violent and destructive, such as an actual shooting war.

This column first appeared on MarketWatch.

More articles by:

Mark Weisbrot is co-director of the Center for Economic and Policy Research, in Washington, D.C. and president of Just Foreign Policy. He is also the author of  Failed: What the “Experts” Got Wrong About the Global Economy (Oxford University Press, 2015).

bernie-the-sandernistas-cover-344x550
October 23, 2019
Kenneth Surin
Western China and the New Silk Road
W. T. Whitney
Stirrings of Basic Change Accompany Protests in Haiti
Louisa Willcox
Inviting the Chief of the Grizzlies to Our Feast
Jonathan Cook
The Democrats Helped Cultivate the Barbarism of ISIS
Dave Lindorff
Military Spending’s Out of Control While Slashing It Could Easily Fund Medicare for All
John Kendall Hawkins
With 2020 Hindsight, the Buffoonery Ahead
Jesse Hagopian
The Chicago Teachers Strike: “Until We Get What Our Students Deserve”
Saad Hafiz
America’s Mission to Remake Afghanistan Has Failed
Victor Grossman
Thoughts on the Impeachment of Donald Trump
Binoy Kampmark
Celebrity Protesters and Extinction Rebellion
John Horning
Spotted Owls and the National Christmas Tree
October 22, 2019
Gary Leupp
The Kurds as U.S. Sacrificial Lambs
Robert Fisk
Trump and the Retreat of the American Empire
John Feffer
Trump’s Endless Wars
Marshall Auerback
Will the GOP Become the Party of Blue-Collar Conservatism?
Medea Benjamin - Nicolas J. S. Davies
Trump’s Fake Withdrawal From Endless War
Dean Baker
Trump Declares Victory in China Trade War
Patrick Bond
Bretton Woods Institutions’ Neoliberal Over-Reach Leaves Global Governance in the Gutter
Robert Hunziker
XR Co-Founder Discusses Climate Emergency
John W. Whitehead
Terrorized, Traumatized and Killed: The Police State’s Deadly Toll on America’s Children
Evaggelos Vallianatos
A World Partnership for Ecopolitical Health and Security
Binoy Kampmark
The Decent Protester: a Down Under Creation
Frances Madeson
Pro-Democracy Movement in Haiti Swells Despite Police Violence
Mike Garrity
Alliance for the Wild Rockies Challenges Logging and Burning Project in Methow Valley
Chelli Stanley
Change the Nation You Live In
Elliot Sperber
Humane War 
October 21, 2019
Jeffrey St. Clair
The Wolf at the Door: Adventures in Fundraising With Cockburn
Rev. William Alberts
Myopic Morality: The Rehabilitation of George W. Bush
Sheldon Richman
Let’s Make Sure the Nazis Killed in Vain
Horace G. Campbell
Chinese Revolution at 70: Twists and Turns, to What?
Jim Kavanagh
The Empire Steps Back
Ralph Nader
Where are the Influentials Who Find Trump Despicable?
Doug Johnson Hatlem
Poll Projection: Left-Leaning Jagmeet Singh to Share Power with Trudeau in Canada
Thomas Knapp
Excuses, Excuses: Now Hillary Clinton’s Attacking Her Own Party’s Candidates
Brian Terrell
The United States Air Force at Incirlik, Our National “Black Eye”
Paul Bentley
A Plea for More Cynicism, Not Less: Election Day in Canada
Walter Clemens
No Limits to Evil?
Robert Koehler
The Collusion of Church and State
Kathy Kelly
Taking Next Steps Toward Nuclear Abolition
Charlie Simmons
How the Tax System Rewards Polluters
Chuck Collins
Who is Buying Seattle? The Perils of the Luxury Real Estate Boom
Weekend Edition
October 18, 2019
Friday - Sunday
Anthony DiMaggio
Trump as the “Anti-War” President: on Misinformation in American Political Discourse
Jeffrey St. Clair
Roaming Charges: Where’s the Beef With Billionaires?
Rob Urie
Capitalism and the Violence of Environmental Decline
Paul Street
Bernie in the Deep Shit: Dismal Dem Debate Reflections
FacebookTwitterRedditEmail