But the US president has many reasons to keep up the pressure on China, says the Financial Times’ Edward Luce.

Donald Trump

Donald Trump in 2016 became the first presidential candidate in decades to seek the White House without first disclosing his tax returns. (AP Photo/Evan Vucci)

LONDON: US president Donald Trump has said that trade wars are easy to win. Reality is usually far messier.

The chances are that he was bluffing when he threatened on Sunday (May 5) to escalate tariffs on Chinese imports this coming Friday — two days after a 100-strong Chinese delegation was due to arrive in Washington for what was billed as the closing phase of a US-China trade deal.

Now the Chinese may not come at all, or arrive in smaller numbers. Few countries, let alone emerging global powers, like to negotiate under duress.

READ: Donald Trump is updating America’s historic ruthlessness, a commentary


China will have to weigh the risk of losing face if it shows up against the spectre of a dramatic escalation in the US-China trade war if it does not. Mr Trump, on the other hand, has shown that he will readily swap a stance of “maximum pressure” for a Taylor Swift-style “Love Story” as caprice demands.

Just ask North Korea’s Kim Jong Un. Their relationship went from mutual threats of fire and fury to an exchange of teenage-esque romantic letters before they had even met. Yet the North Korea situation is now almost back to square one.

READ: North Korea’s same-old, brand-new nuclear impasse, a commentary

The differences between the US and China are almost as insoluble. Mr Trump wants China to dismantle its Made in China 2025 policy that seeks to have the country catch up with the west in 10 different areas by 2025 and dominate artificial intelligence by 2030.

This is not merely an economic goal. It is President Xi Jinping’s signature national security strategy for China’s emergence as a global power.

It is thought that Mr Trump’s latest Twitter outburst was prompted by China’s move to water down its promises to cut subsidies to its state-owned enterprises. 

Chinese Foreign Minister Wang Yi said the US and China have made "significant progress" in

Chinese Foreign Minister Wang Yi said the US and China have made “significant progress” in trade talks but he blasted hawks in Washington who have advocated a “decoupling” between the two countries’ economies. (Photo: AFP/Wang Zhai)

Beijing may still be promising to purchase vast amounts of soyabeans and other US commodities to reduce the bilateral trade deficit, but the real prize is to alter China’s strategic course.


Mr Trump has two reasons to keep the pressure on China to the maximum. First, US growth is relatively strong and the equity market is doing well. That gives him greater leeway to threaten a trade war without killing America’s animal spirits.

Had US growth slowed in the first quarter, as many were predicting, Mr Trump’s ire would be directed at Jay Powell, the chairman of the US Federal Reserve. 

But the drop last Friday of US joblessness to a 49-year low, and an annualised growth rate of 3.2 per cent in the first quarter, gave Mr Trump the confidence to step up the game of bluff with China.

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Second, Mr Trump has staked his reputation on eliminating the trade deficit with China. Most economists consider that goal to be unattainable — and undesirable. Moreover, Mr Trump’s claim that China picks up the tab for the tariffs on its imports is far-fetched. Those costs are borne by US consumers.

Chinese imports

US President Donald Trump says the US would raise tariffs on US$200 billion of Chinese goods to 25 per cent. (Photo: AFP/STR)


Either way, Mr Trump has boxed himself into a corner. He has promised something he cannot force China to deliver. That is without mentioning the near-impossibility of persuading Mr Xi to abandon his Made in China 2025 drive.

So what will happen next? China has had two-and-a-half years of watching Mr Trump make extravagant threats that he fails to follow through. Mr Kim is exhibit A. Simply by agreeing to meet Mr Trump, North Korea’s leader transformed his rhetoric.

Recent history suggests that all Mr Xi needs to do is make a few grand promises but keep the details hazy. That — and a pledge to seal the deal in Mar-a-Lago — should be enough to mollify Mr Trump.



Asia News


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