Trump will hardly push towards trade war against China

By George N. Tzogopoulos

While Sino-American relations are taking shape under the Trump administration, a recent decision made by the US President might cast a shadow over them. In particular, President Trump signed a memorandum asking Trade Representative, Ambassador Robert Lighthizer, to investigate China’s laws, policies, practices, and actions. Acting in consistence with section 302(b) of the Trade Act of 1974 Lighthizer is now instructed to possibly find out if Chinese tactics are allegedly unreasonable or discriminatory, harming American intellectual property, innovation, and technology. For its part, China expressed its serious concern about potential consequences of the presidential memorandum which was signed less than a month after the bilateral Comprehensive Economic Dialogue was concluded in Washington.

US President Donald Trump speaks during an event to sign a memorandum calling for a trade investigation of China, Monday, Aug. 14, 2017, in the Diplomatic Reception Room of the White House in Washington.[Photo: VCG]

At first glance, perspectives for future trade cooperation between China and US are harmed indeed. The tone used in a White House fact sheet is aggressive against China stigmatizing the country for benefiting ‘from the theft of American intellectual property’. According to Washington’s position the national economy and American workers are critically influenced and the cost is estimated to be ‘as high as $600 billion a year’.

There are two main reasons explaining the decision of Trump to potentially order Lightizer to start an investigation against China. The first is revolving around his will to show to American people that he is keeping his relevant pre-election promise and is making a real difference from his predecessor Barack Obama. In August 2016, for instance, he had said that ‘enforcing intellectual property rules alone could save millions of American jobs’ and had directly targeted China. In theory, the US President is currently developing his ‘America First’ policy. It is not surprising that he signed the memorandum surrounded by company executives.

And the second reason refers to Trump’s motivation to distract attention from political difficulties he is encountered with. Apparent interactions between his team and Russia are only part of the story. The Charlottesville case further outlines how the US President can be further isolated domestically, or at least govern a completely divided country. Only a few days ago a Gallup’s poll showed him with just a 34% approval rating, his lowest since taking office in January, and a 61% disapproval rating.

Apart from the afore-mentioned two reasons, what is perhaps more interesting is to elaborate on the new steps in the aftermath of Trump’s decision. Although the scenario of a trade war should not be excluded, it remains highly unlikely. While Washington is framing the memorandum as a proof of its determination to protect the national interest against Beijing’s practices, Trump was careful to avoid a direct confrontation with China. As opposed to pressure exerted on him by some Senators to immediately proceed with sanctions against China, the US President selected the wait-and-see option. 

It can be taken for granted that the investigation will begin indeed. However, it is not clear whether this process will lead to trade actions against China. The Chinese administration could challenge the US action against it in the World Trade Organization. Also, bilateral consultations might be another outcome. Additionally, it cannot be anticipated how long the investigation will last. The Washington Post, for example, asserts that it ‘could take up to a year to conclude’. Should this happens, the days of the result will almost coincide with the ones of the 2018 mid-term election during which the American political landscape will be further fragmented. 

Within this context, Trump is probably gaining time. Even though he is now the US President, his previous experience as a businessman needs to be remembered. Trump understands that Chinese countermeasures in the case of a trade war will damage the American economy to an unprecedented degree. Hence, he will be the first to refrain from pushing the button towards this direction. This said, he perhaps only seeks to bargain with the Chinese administration in supporting his foreign policy agenda regarding North Korea. This agenda is substantially based on a leading role to be assumed by Beijing in bringing Pyongyang to the negotiations table. On the very same day Trump signed the referendum, US Secretary of State Rex Tillerson and Defense Secretary James Mattis co-authored an opinion piece in The Wall Street Journal about North Korea reiterating the American argumentation. 

All in all, unilateral actions do not help the Sino-American partnership. In spite of his unpredictable character, Trump believes generally in the significance of friendly consultations and dialogue.  That is why – after the memorandum – he authorized Chairman of the US Joint Chiefs of Staff Joseph Dunford to go to China where he met President Xi Jinping at the Great Hall of the People.  Prudence has also to mark Sino-American economic relations burying the trade war possibility. 

(Dr George N. Tzogopoulos is a senior research fellow and advisor for EU-China relations at the Centre international de formation européenne, Nice/Berlin.)