Trump Hasn’t Killed the Global Trade System. Instead, He Split it in Two.

Allies find relations modestly tweaked, despite the president’s rhetoric, while relations with China are entering a deep freeze

When Donald Trump entered the White House on a platform of defiant nationalism nearly two years ago, many feared he would dismantle the global trading system the U.S. and its allies had built over the past 70 years.

He hasn’t. Instead, he is presiding over its realignment into two distinct systems.

  1. One, between the U.S. and its traditional, democratic trading partners, looks a lot like the system that has prevailed since the 1980s: free trade with a smattering of quotas and tariffs like those Ronald Reagan once deployed.
  2. The second reflects an emerging rivalry between the U.S. and China carrying echoes of the Cold War. On trade, investment and technology, the U.S. is moving to undo some of the integration that followed China’s accession to the World Trade Organization in 2001.

There are two big questions hanging over this realignment. The first is deciding how far the U.S. is prepared to decouple from China. The U.S. has given China until March 1 to avoid higher tariffs by addressing complaints it discriminates against foreign companies and steals their technology. Mr. Trump is counting on a deal that avoids a trade war. But many in his administration and Congress don’t trust China to make the necessary concessions and would likely advocate a sharper break.

The second question is whether the U.S. can persuade allies to join a united front to contain China. Other countries don’t relish the choice. Their economic ties to China are far greater than they ever were to the Soviet Union during the Cold War.

Two years ago, it was easy to predict a grimmer fate for the global trading system. Mr. Trump campaigned as a protectionist willing to tear up trade agreements and raise tariffs to shrink the trade deficit and bring back factory jobs.

In his first week he withdrew from the unratified 12-nation Trans-Pacific Partnership. He prepared to pull out of the U.S.-Korea Free Trade Agreement (Korus) and the North American Free Trade Agreement. Earlier this year he imposed steep tariffs on imports of steel and aluminum, using a little-used national security law, and threatened the same for autos.

Today, Korus and Nafta have been replaced by updated agreements(one not yet ratified) that look much like the originals. South Korea accepted quotas on steel. Mexico and Canada agreed to higher wages, North American content requirements and quotas for autos.

These represent a step back from free trade toward managed trade, but they will have little practical effect: The limits on how many cars Mexico and Canada can ship duty-free to the U.S., for example, exceed current shipments. Mr. Trump hasn’t stopped threatening auto tariffs, but for now his officials have elected instead to seek broader tariff reductions with Japan and the European Union.

.. Meanwhile, the U.S. trade deficit that incenses Mr. Trump has grown during his presidency, especially with China and Mexico, as a strong American economy sucks in imports. His exhortations to manufacturers to bring jobs back to the U.S. have largely fallen on deaf ears.

Douglas Irwin, an economist and trade historian at Dartmouth College, calls these results the “status quo with Trumpian tweaks: a little more managed trade sprinkled about for favored industries. It’s not good, but it’s not the destruction of the system.”

.. Yet the status quo with China is crumbling. Businesses have grown disillusioned with China’s restrictions on their activities, forced technology transfer and intellectual-property theft, all aimed at building up domestic competitors at foreign expense. Meanwhile, legislators in both parties are alarmed at increased military assertiveness and domestic repression under President Xi Jinping.

.. When Mr. Xi visited the U.S. in 2015, Mr. Sullivan urged his colleagues to pay more attention to China’s rise. On the senate floor, he quoted the political scientist Graham Allison: “War between the U.S. and China is more likely than recognized at the moment.”

Last spring, Mr. Sullivan went to China and met officials including Vice President Wang Qishan. They seemed to think tensions with the U.S. will fade after Mr. Trump leaves the scene, Mr. Sullivan recalled.

“I just said, ‘You are completely misreading this.’” The mistrust, he told them, is bipartisan, and will outlast Mr. Trump.

While delivering one message to China, Mr. Sullivan gave a different one to the administration and its trade negotiators: Don’t alienate allies needed to take on China.

“Modernize the agreements but stay within the agreements,” he says he counseled them. “Then we have to turn to the really big geostrategic challenge facing our country and that’s China.”

His was one voice among many urging Mr. Trump to single out China for pressure. Presidents Obama and George W. Bush sought to change China’s behavior through dialogue and engagement. Obama officials had begun to question engagement by the end of the administration. Last year, in its National Security Strategy, the Trump administration declared engagement a failure.

The Trump administration regards economic policy and national security as inseparable when it comes to Beijing, because China’s acquisition of Western technology both strengthens China militarily and weakens the U.S. economically.

The administration has yet to publicly explain its goals. In 1946, at the start of the Cold War, diplomat George Kennan made the case for containing the Soviet Union in his famous “long telegram.” The Trump administration hasn’t done anything comparable for China. One reason might be that administration officials are divided. Mr. Trump appears torn between wanting to halt China’s rise at any cost and hoping for “a big and very comprehensive deal” that lifts the cloud of a trade war.

.. U.S. and domestic concerns have prompted Australia, New Zealand, Japan, Britain and Canada to restrict or consider restricting Huawei equipment in their telecom infrastructure, in particular for the next 5G mobile phone standard.

The U.S. is also seeking to wall China off from future trade deals. It insisted the pact replacing Nafta include a clause letting the U.S. quit if either Canada or Mexico signs a free-trade agreement with a “non-market economy,” i.e., China.

.. The first goes to the heart of Mr. Trump’s goal. If his aim is to hold back China’s advance, economists predict he will fail. China’s innovative capacity has expanded dramatically. China now accounts for 18.6% of articles in international scientific journals, according to one study, and nearly a quarter of global venture-capital investment, according to another.

Indeed, some China experts fear that the U.S., by adopting a more adversarial approach, weakens China’s reformers and strengthens its nationalist factions, making conflict more likely. They predict China will intensify its pursuit of technological self-sufficiency.

.. Persuading other countries to hold China at arm’s length will be harder than containing the Soviet Union. China accounts for 11% of world exports, whereas the Soviet Union in the 1980s accounted for less than 3%,

.. China is 22% of Japanese imports and exports; the Soviet Union was less than 1%.

.. Many of China’s close neighbors depend far more, economically, on China than on the U.S.

.. U.S. officials note that China’s aid, such its Belt and Road infrastructure program, often saddles recipients with debt. Yet the U.S. offers no alternative, said Mr. Rudd.
.. Some of Mr. Trump’s trade policies undermine the united front he wants against China. He hasn’t sworn off protectionism against U.S. allies, promising to withdraw from Nafta even if its replacement isn’t ratified by Congress. His steel and aluminum tariffs, most of which remain in place, outraged such allies as Canada.

U.S. officials play down such frictions as easily worked out. Abroad, they are seen as more serious. Canadian ambassador to the U.S. David MacNaugton said he told U.S. trade negotiators that if Mr. Trump carried through on his threatened 25% tariff on Canadian autos, it would fundamentally change bilateral relations for the worse for years to come. In a letter accompanying Nafta’s replacement, the U.S. agreed not to levy the tariffs.

Pope Francis Is Beloved. His Papacy Might Be a Disaster.

the great achievement of Pope Francis’ five years on the papal throne. He leads a church that spent the prior decade embroiled in a grisly sex abuse scandal, occupies an office often regarded as a medieval relic, and operates in a media environment in which traditional religion generally, and Roman Catholicism especially, are often covered with a mix of cluelessness and malice.

And yet in a remarkably short amount of time — from the first days after his election, really — the former Jorge Bergoglio has made his pontificate a vessel for religious hopes that many of his admirers didn’t realize or remember that they had.

.. the theological risks he’s taken in pushing for changes that liberal Westerners tend to assume Catholicism must eventually accept — shifts on sexual morality above all, plus a general liberalization in the hierarchy and the church.

.. But when people say, “He makes me want to believe again,” as a lapsed-Catholic journalist said to me

.. What my friends and acquaintances respond to from this pope, rather, is the iconography of his papacy — the vivid images of humility and Christian love he has created, from the foot-washing of prisoners to the embrace of the disfigured to the children toddling up to him in public events.

.. Like his namesake of Assisi, the present pope has a great gift for gestures that offer a public imitatio Christi, an imitation of Christ.

.. And the response from so many otherwise jaded observers is a sign of how much appeal there might yet be in Catholic Christianity, if it found a way to slip the knots that the modern world has tied around its message.

.. we — are always at risk of finding in the mirror the self-righteous elder brother in Jesus’ parable of the prodigal son, who resents his father’s liberality, the welcome given to the younger brother coming home at last.

.. The cardinals who chose Jorge Bergoglio envisioned him as the austere outsider.

.. Vatican life is more unsettled than under Benedict XVI, the threat of firings or purges ever present, the power of certain offices reduced, the likelihood of a papal tongue-lashing increased.

.. the blueprints for reorganization have been put off; many ecclesial princes have found more power under Francis; and even the pope’s admirers joke about the “next year, next year …” attitude that informs discussions of reform.

.. Francis just spent a recent visit to Chile vehemently defending a bishop accused of turning a blind eye to sex abuse, while one of his chief advisers, the Honduran Cardinal Óscar Maradiaga, is accused of protecting a bishop charged with abusing seminarians even as the cardinal himself faces accusations of financial chicanery.

.. the idea of this pope as a “great reformer,” to borrow the title of the English journalist Austen Ivereigh’s fine 2014 biography, can’t really be justified by any kind of Roman housekeeping.

.. Instead Francis’ reforming energies have been directed elsewhere, toward two dramatic truces that would radically reshape the church’s relationship with the great powers of the modern world.

.. The first truce this pope seeks is in the culture war

.. the conflict between the church’s moral teachings and the way that we live now, the struggle over whether the sexual ethics of the New Testament need to be revised or abandoned in the face of post-sexual revolution realities.

.. Instead of formally changing the church’s teaching on divorce and remarriage, same-sex marriage, euthanasia — changes that are officially impossible, beyond the powers of his office — the Vatican under Francis is making a twofold move.

.. First, a distinction is being drawn between doctrine and pastoral practice that claims that merely pastoral change can leave doctrinal truth untouched. So a remarried Catholic might take communion without having his first union declared null, a Catholic planning assisted suicide might still receive last rites beforehand, and perhaps eventually a gay Catholic can have her same-sex union blessed — and yet supposedly none of this changes the church’s teaching that marriage is indissoluble and suicide a mortal sin and same-sex wedlock an impossibility, so long as it’s always treated as an exception rather than a rule.

.. At the same time, Francis has allowed a tacit decentralization of doctrinal authority, in which different countries and dioceses can take different approaches

.. In effect he is experimenting with a much more Anglican model for how the Catholic Church might operate — in which the church’s traditional teachings are available for use but not required

.. different countries may gradually develop away from each other theologically and otherwise.

.. seeking a truce not with a culture but with a regime: the Communist government in China

.. Such a reconciliation, if accomplished, would require the church to explicitly cede a share of its authority to appoint bishops to the Politburo — a concession familiar from medieval church-state tangles, but something the modern church has tried to leave behind.

.. A truce with Beijing would differ from the truce with the sexual revolution in that no specific doctrinal issue is at stake, and no one doubts that the pope has authority to conclude a concordat with a heretofore hostile and persecuting regime.

.. the two truces are similar in that both would accelerate Catholicism’s transformation into a confederation of national churches — liberal and semi-Protestantized in northern Europe, conservative in sub-Saharan Africa, Communist-supervised in China.

.. both treat the concerns of many faithful Catholics — conservative believers in the West, underground churchgoers in China — as roadblocks to the pope’s grand strategy.

.. they both risk a great deal — in one case, the consistency of Catholic doctrine and its fidelity to Jesus; in another, the clarity of Catholic witness for human dignity — for the sake of reconciling the church with earthly powers.

.. they take this risk at a time when neither Chinese Communism nor Western liberalism seem exactly like confident, resilient models for the human future — the former sliding back toward totalitarianism, the latter anxious and decadent and beset by populist revolts.

.. the “Francis effect.”

.. If current trends continue, China could have one of the world’s largest Christian populations by this century’s end, and this population is already heavily evangelical

.. Francis will have ceded the moral authority earned by persecuted generations, and ceded the Chinese future to those Christian churches, evangelical especially, that are less eager to flatter and cajole their persecutors.

.. The gamble on an Anglican approach to faith and morals is even more high-risk — as Anglicanism’s own schisms well attest.

.. it will ensure that the church’s factions, already polarized and feuding, grow ever more apart.

.. it implies a rupture (or, if you favor it, a breakthrough) in the church’s understanding of how its teachings can and cannot change

.. Francis’ inner circle is convinced that such a revolution is what the Holy Spirit wants — that the attempts by John Paul II and Benedict to maintain continuity between the church before and after Vatican II ended up choking off renewal.

.. this pope has not just exposed tensions; he has heightened them, encouraging sweeping ambitions among his allies and pushing disillusioned conservatives toward traditionalism.

.. here is no sign as yet that Francis’s liberalization is bringing his lapsed-Catholic admirers back to the pews;

.. Whereas accelerating division when your office is charged with maintaining unity and continuity is a serious business