Guest column: Trump isn’t winning on trade with China

Published 12:00 am Sunday, April 15, 2018

In regard to a potential trade war with China, President Donald Trump is fighting the wrong battle, and it’s a battle that we can’t win.

In a tweet, the president stated, “When you’re already $500 Billion DOWN, you can’t lose!”, referring to our trade deficit with China of $566 billion last year. For a president who sees every issue in terms of winning and losing, this is a simplistic view of a complex problem. The issue is whether we have a level playing field in our trade with China. Is their government unduly subsidizing their industries, allowing the sale of their products in the U.S. at lower than reasonable prices? Is their government demanding that U.S. technology companies hand over their technology in return for access to the Chinese market?

Assuming that we could level the playing field, our trade deficit would be determined by the markets in each country; do Americans choose to purchase more goods from China than Chinese choose to purchase from us? There is no harm in a trade deficit if it occurs in a fair and open market.

There are clearly issues on the Chinese side that need to be addressed in order to ensure a level playing field. What should we be doing to establish fair trade between our two countries?

First of all, we need to internally decide on our goals. What concessions do we need from China, and what will they be willing to concede in order to meet our objectives? You can’t negotiate a deal unless you set real and achievable targets. While eliminating our trade deficit with China might be set forth as an objective in opening negotiations, it can’t possibly be viewed as an achievable goal as that is unlikely to occur. However, backing off of this objective could be the chip that we need to hand the Chinese to get what we want.

Secondly, we needed to initiate the process through the World Trade Organization by making our case as to how the Chinese are tilting the playing field. As it has turned out this week, China went to the WTO first to register a complaint about U.S. tariffs on Chinese steel and aluminum. In effect, China has taken the high ground (which we abandoned) and made us appear to be the reckless party.

We have now initiated trade discussions with the Chinese in the midst of tariff threats from both sides. Personally, having negotiated numerous international deals during my career, I would rather be on their side of the table than ours. While our tariffs would cause China some economic hardship, theirs are surgically targeted at the Trump and Republican voter base — rural growers of grain, soy beans and fruit. How long will our negotiators be willing to sit there getting nowhere while Trump’s dedicated supporters get financially clobbered?

Trump’s new economic adviser, Larry Kudlow, said this week that the Chinese have more to lose than do we. In theory, this is true if all you look at are the trade numbers. However, the Chinese tend to take the long-term view while Donald Trump is all about instant gratification combined with overreaction. The Chinese know we have midterm elections coming up in a mere seven months, and they are far more subtle than the Russians, who directly intervened in our 2016 elections. They understand that a trade war would be highly damaging to the Republican base and that pressure will build on the administration from Congressional lawmakers to cease the tariffs. They are highly likely to sit patiently at the negotiating table and give nothing away.

We do need to level the playing field with the Chinese. Unfortunately, this administration lacks the skill and experience to effectively negotiate a deal. In the 2016 election, we thought that we had elected as our president a great negotiator; as it turns out, we did not.

— Rich Belzer lives in Bend.

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