Australians lack confidence in Donald Trump and Xi Jinping. Photo: AFP/Nicolas Asfouri

If it remains steadfast, the United States could force China to agree to the comprehensive trade deal that it has sought. But with its president, Donald Trump, suffering numerous serious setbacks, it may accept a partial agreement with the Asian giant.

At the moment, it seems, everything – both at home and abroad – goes against America’s 45th president. Even by the standards of his troubled presidency, Trump has been having a very bad time. His second summit with Kim Jong Un in Hanoi last week was abruptly cut short without any deal after he had invested a great deal of time, energy, prestige and hope in it.

Now that he has returned from Vietnam’s capital empty-handed, he has to deal with even bigger challenges at home. In devastating testimony before the Democrat-led House Oversight Committee, which took place at the same time Trump sat down with the North Korean dictator, his disgraced former lawyer and fixer, Michael Cohen, painted him as “a racist”, “a conman” and “a cheat.”

Special counsel Robert Mueller will soon submit the final report of his investigation into Russian interference in the 2016 presidential election. On March 4, Democrats launched an “abuse of power” investigation. Any wrongdoing or crimes uncovered by these two investigations would be a nightmare for Trump because they could put his presidency in greater turmoil.

Given such problems, the former businessman-turned-president is desperate for anything positive that could help him to deflect attention from them. And at the moment, perhaps, nothing would serve his political interests more than signing a trade deal with China.

Judging by the recent comments made by Trump and some of his senior aides, such as Treasury Secretary Steven Mnuchin, it seems he is eager for – and close to – a deal with Beijing.

The Wall Street Journal reported on March 3 that the world’s two biggest economies are in the final stages of completing a trade deal, with Beijing offering to lower tariffs and other restrictions on American autos and agricultural and chemical products, and Washington is considering dropping most, if not all, sanctions levied against Chinese products since last year. According to this report, Trump could meet President Xi Jinping and sign a formal agreement at his Mar-a-Lago resort in Florida by the end of this month.

If the US cannot get any further concessions from China in the coming weeks and agrees to such a deal, it will be clear that it failed to force Beijing to address key issues such as intellectual property theft, forced technology transfer, and state subsidies.

But Trump might accept such an imperfect deal because, as noted, he desperately needs something he can consider a big win at a time when he is faced with myriad problems. What’s more, a swift deal would address some of his main personal and political concerns.

He launched a trade war against China, first and foremost, because of his frustration with America’s huge trade deficit with the Asian behemoth. If China makes huge purchases of American goods, it can reduce that imbalance.

If those big buys are mostly agricultural products, such as soybean, it will be a big boost for US farmers, Trump’s main supporters, who have suffered the most from his China trade confrontation. He is seeking re-election in 2020, and he cannot win without the support of US farmers, especially those in key swing states in the Midwest.

Moreover, as Trump is abnormally obsessed with the stock market, considering it a measure of the success of his economic policies, he may agree to a swift deal to keep it buoyant and give himself a boost ahead of his re-election campaign. Noting that American stocks rose following the report that the US and China are getting close to a trade deal, he is probably even more tempted to do so.

Rushing to a partial accord is certainly opposed by many in American society, Congress and even his own administration, who seek a robust and enforceable deal

But rushing to a partial accord is certainly opposed by many in American society, Congress and even his own administration, who seek a robust and enforceable deal.

On February 27, Senate Democratic leader Chuck Schumer cautioned the Republican president not to settle for a weak deal with Beijing, saying “Shame on him if he does.” Addressing Trump directly, he said: “It would be a momentous failure if you relent now and don’t receive meaningful, enforceable and verifiable commitments on structural reforms to China’s unfair trade policy.” Schumer warned: “Simply buying more soybeans or buying more materials, planes is not going to solve the structural problem. And in a few months China will continue to unfairly gain on us.”

In his remarks to the US Senate, the top Democrat also said the US “business community  does not want our president to capitulate.”

On the same day, Robert Lighthizer, Trump’s Trade Representative, who is also leading the US’s current trade negotiations with Beijing, also told American lawmakers that the US would only accept a trade deal with China that was deep, structural and enforceable.

“Don’t go for the soybean solution,” he urged. “This is our one chance.” What’s more, unlike his own boss and other members of the Trump administration, such as Steven Mnuchin, who recently said the two countries were close to reaching a deal, Lighthizer stated, “There’s no agreement on anything until there’s agreement on everything.”

In many respects, Schumer, Lighthizer and the like are right to urge Trump to stay strong. The trade war certainly affects both the US and China, and the longer it lasts the greater damage it does to them both. But, evidently, China has suffered much more in this conflict and is more desperate for a deal.

If the world’s biggest economy is willing to accept some short-term pains, such as the economic harm that tariffs inflict on its farmers, it could compel China to stop the practices and policies that Washington considers unfair or illegal.

Lighthizer is right. Never before has the US been in such a strong position to seek such changes from Beijing, and it may never have another opportunity like it in the future. If it fails to force China to agree to a level playing field in trade, technology and other economic issues now, the US will face many disadvantages in those areas down the road. A stronger China won’t be easily coerced into making any changes it doesn’t want.

Trump has for a long time blamed – perhaps justifiably – his immediate predecessors for the US’s trade-related problems with China. He has also been rightly applauded for taking tough trade actions against China. But if he accepts a slapdash deal now, his critics and many others will focus the blame on him. Thus, rather than helping him evade the problems he is faced with, a sloppy China deal will invite greater opposition and condemnation, causing more trouble for him.

In his press conference after his summit with Kim Jong Un, which abruptly collapsed with no deal on February 28, Trump revealed that he “had some options” to ink an agreement with North Korea and “could have 100% signed something today.” But he “decided not to do any of the options” or sign anything because he “would much rather do it right than do it fast.”

Many US lawmakers, including top Democrats, and foreign policy experts, hailed his decision to walk away from the talks with North Korea. If their positive reaction is any guide, for his own sake – and especially for his country’s long-term interests – it is better for him “to do it right than do it fast” with China.

In his Hanoi press briefing, Trump also stated, “I am always prepared to walk. I’m never afraid to walk from a deal, and I would do that with China, too, if it didn’t work out.”

According to John Bolton, Trump’s national security adviser, the US president was “not desperate for a deal, not with North Korea, not with anybody if it’s contrary to American national interests.”

Asked if Trump would walk away from a deal with China that was not perfect, Secretary of State Michael Pompeo also gave a firm “yes” and pointed to his boss’s rejection of an agreement with North Korea in Hanoi.

If his actions and remarks during and after the Hanoi summit, as well as the comments made by his top advisers, such as Bolton, Lighthizer and Pompeo, are any indication, Trump may not rush to a slapdash, inadequate deal with Beijing as some fear or predict.

Asia Times Financial is now live. Linking accurate news, insightful analysis and local knowledge with the ATF China Bond 50 Index, the world's first benchmark cross sector Chinese Bond Indices. Read ATF now. 

Leave a comment

Your email address will not be published. Required fields are marked *