President Trump loves making big deals. At least he loves saying he’s making big deals, regardless of whether there is any meaningful deal there at all.
In June, he announced a “deal” with North Korea for complete denuclearization; it was actually just a vaguely worded declaration, and there has been no sign of progress since.
The following month, Trump hyped a “deal” with the European Union to liberalize trade — except, once again, there was no enforceable deal to speak of, just a temporary truce that’s falling apart.
In these and other high-stakes negotiations, the president has brought us and other nations to the edge of the abyss. And after doing so, he has demanded praise for opting not to make that final push.
At the Group of 20 summit in Buenos Aires, Trump headed into trade negotiations with Chinese President Xi Jinping. Given Trump’s track record, we should judge any “deal” announcement — if there is one — with a boulder of salt, and remember what actual success would include: major, concrete Chinese commitments to correct ongoing transgressions against the United States and other foreign competitors.
Which seem highly unlikely at this point.
To be sure, whatever their public postures, both sides are motivated to cool current tensions.
China’s manufacturing sector is suffering. So is America’s, since Trump has levied tariffs on lots of Chinese products that American firms purchase to make their own products. U.S. retailers and tech firms are in pain, too, as are farmers throughout Trump country.
Farm bankruptcies in the upper Midwest have spiked, thanks in part to China’s retaliatory tariffs. Chinese purchases of soybeans — which were the top U.S. agricultural export to China last year — have fallen by 97 percent. Farmers are leaving crops in the fields to rot.
Further escalation in the trade war — including Trump’s threat to ratchet up tariffs on $200 billion in Chinese goods in January from the current 10 percent to 25 percent — would be devastating, for Chinese and U.S. companies alike.
One possible outcome of the Trump-Xi meeting might be that Trump at least temporarily suspends this threat of higher tariffs. In exchange, China might agree to buy more soybeans and liquefied natural gas from the United States.
“China is willing to throw a whole bunch of money at this to make it go away,” says Syracuse University economics professor Mary E. Lovely.
China might also even be willing to lower a tariff or two.
All that would certainly be preferable to further escalation. But it won’t be material progress, however Trump might want to describe it.
It is merely a pause or, at best, a reversion to the path we likely would have been on had we skipped the past few months of Sturm und Drang. That’s essentially what happened with NAFTA 2.0, by the way: Trump spent months wreaking economic and diplomatic devastation, only to triumphantly announce roughly the same North American Free Trade Agreement update that would have resulted without all that pain.
What we should be looking for, instead, are much bigger reform commitments from China, with specific deliverables and timelines and benchmarks for those deliverables.
And I don’t mean a commitment to reduce the United States’ trade deficit with China.
If that’s the president’s big “victory” from this meeting, consider it a huge red flag. While Trump is obsessed with trade deficits, they are not inherently bad, nor are they necessarily a measure of “unfair” trade. They are a function of lots of other broader macroeconomic factors.
What we want instead are corrections to the unfair practices China has been committing: intellectual property theft, forced technology transfer, cyberhacking, and subsidies to state-owned enterprises and domestic industries related to the “Made in China 2025” initiative.
There is good reason to be skeptical that we’ll see anything meaningful on these fronts, though.
First is that, at least according to public reports, there has not been the kind of advance work needed to make detailed agreements on such complex issues.
Second, China refuses to even admit it has committed some of these transgressions, such as rampant theft of intellectual property.
And third, even if China does make firm commitments for policy reform, monitoring and enforcing those commitments will be extremely challenging — as we have seen in the past. Which is precisely why, right about now, it would be helpful to have more friends — the kind of friends Trump is so good at pushing away at events such as the G-20 gathering — helping us hold China’s feet to the fire.