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
Weekend Edition
November 15, 2019
Friday - Sunday
Melvin Goodman
Meet Ukraine: America’s Newest “Strategic Ally”
Rob Urie
Wall Street and the Frankenstein Economy
Jeffrey St. Clair
Roaming Charges: Ukraine in the Membrane
Jonathan Steele
The OPCW and Douma: Chemical Weapons Watchdog Accused of Evidence-Tampering by Its Own Inspectors
Kathleen Wallace
A Gangster for Capitalism: Next Up, Bolivia
Andrew Levine
Get Trump First, But Then…
Thomas Knapp
Trump’s Democratic Critics Want it Both Ways on Biden, Clinton
Ipek S. Burnett
The United States Needs Citizens Like You, Dreamer
Michael Welton
Fundamentalism as Speechlessness
David Rosen
A Century of Prohibition
Nino Pagliccia
Morales: Bolivia Suffers an Assault on the Power of the People
Dave Lindorff
When an Elected Government Falls in South America, as in Bolivia, Look For a US Role
John Grant
Drones, Guns and Abject Heroes in America
Clark T. Scott
Bolivia and the Loud Silence
Manuel García, Jr.
The Truthiest Reality of Global Warming
Ramzy Baroud
A Lesson for the Palestinian Leadership: Real Reasons behind Israel’s Arrest and Release of Labadi, Mi’ri
Charles McKelvey
The USA “Defends” Its Blockade, and Cuba Responds
Louis Proyect
Noel Ignatiev: Remembering a Comrade and a Friend
John W. Whitehead
Casualties of War: Military Veterans Have Become America’s Walking Wounded
Patrick Bond
As Brazil’s ex-President Lula is Set Free and BRICS Leaders Summit, What Lessons From the Workers Party for Fighting Global Neoliberalism?
Alexandra Early
Labor Opponents of Single Payer Don’t  Speak For Low Wage Union Members
Pete Dolack
Resisting Misleading Narratives About Pacifica Radio
Edward Hunt
It’s Still Not Too Late for Rojava
Medea Benjamin - Nicolas J. S. Davies
Why Aren’t Americans Rising up Like the People of Chile and Lebanon?
Nicolas Lalaguna
Voting on the Future of Life on Earth
Jill Richardson
The EPA’s War on Science Continues
Lawrence Davidson
The Problem of Localized Ethics
Richard Hardigan
Europe’s Shameful Treatment of Refugees: Fire in Greek Camp Highlights Appalling Conditions
Judith Deutsch
Permanent War: the Drive to Emasculate
David Swanson
Why War Deaths Increase After Wars
Raouf Halaby
94 Well-Lived Years and the $27 Traffic Fine
Kollibri terre Sonnenblume
Coups-for-Green-Energy Added to Wars-For-Oil
Andrea Flynn
What Breast Cancer Taught Me About Health Care
Negin Owliaei
Time for a Billionaire Ban
Binoy Kampmark
Business as Usual: Evo Morales and the Coup Condition
Bernard Marszalek
Toward a Counterculture of Rebellion
Brian Horejsi
The Benefits of Environmental Citizenship
Brian Cloughley
All That Gunsmoke
Graham Peebles
Why is there so Much Wrong in Our Society?
Jonah Raskin
Black, Blue, Jazzy and Beat Down to His Bones: Being Bob Kaufman
John Kendall Hawkins
Treason as a Lifestyle: I’ll Drink to That
Manuel García, Jr.
Heartrending Antiwar Songs
Caoimhghin Ó Croidheáin
Poetry and Political Struggle: The Dialectics of Rhyme
Ben Terrall
The Rise of Silicon Valley
David Yearsley
Performance Anxiety
FacebookTwitterRedditEmail