What the world has learned from Trump’s trade war.
This is the way the trade war ends. Not with a bang but with empty bombast.
According to multiple news organizations, the U.S. and China are close to a deal that would effectively end trade hostilities. Under the reported deal, America would remove most of the tariffs it imposed last year. China, for its part, would end its retaliatory tariffs, make some changes to its investment and competition policies and direct state enterprises to buy specified amounts of U.S. agricultural and energy products.
The Trump administration will, of course, trumpet the deal as a triumph. In reality, however, it’s much ado about nothing much.
As described, the deal would do little to address real complaints about Chinese policy, which mainly involve China’s systematic expropriation of intellectual property. Nor would it do much to address Donald Trump’s pet although misguided peeve, the imbalance in U.S.-China trade. Basically, Trump will have backed down.
If this is the story, it will repeat what we saw on the North American Free Trade Agreement, which Trump denounced as the “worst trade deal ever made.” In the end, what Trump negotiated — the U.S. Mexico Canada Agreement, or U.S.M.C.A. — was very similar to the previous status quo. Trade experts I know, when not referring to it as the Village People agreement, call it “Nafta 0.8”: fundamentally the same as Nafta, but a bit worse.
Why is the president who famously declared that “trade wars are good, and easy to win” effectively waving the white flag? Mainly because winning turns out not to be easy, at all.
Trump’s beloved stock market hates talk of trade war. There is no broad constituency for protectionism — in fact, public opinion has become much more pro-free trade under Trump. And Chinese retaliation has hit hard at voting blocs Trump depends on, especially in farm states.
Now, agreement with China isn’t a done deal. Trump may also yet open another front in the trade war, against European automobiles. And the Village People agreement awaits congressional approval, and it’s not clear what Trump will do if that isn’t forthcoming.
Still, it looks possible, even likely, that within a few months most though not all of the trade war will have been unwound. So will it all look in retrospect like a passing storm, with few long-term consequences?