When Treasury Secretary Steve Mnuchin warned that Washington was not “going easy” on China by halting the trade war despite the deal reached 11 days earlier, he was not joking.
The White House reignited U.S.-China trade conflict on Tuesday by reaffirming its aims to impose tariffs, enforce sanctions and curb China’s “unfair trade practices.”
While analysts have speculated that the Trump administration’s remarkable volte-face on U.S.-China trade policy may serve to increase Washington’s leverage as Commerce Secretary Wilbur Ross visits Beijing on Saturday, Trump’s inconsistent messaging may compromise the art of the deal.
The White House’s belligerent announcement on Tuesday reinstated a 25-percent tariff on goods imported from China, including “industrially significant” technologies that are included in Beijing’s “Made in China 2025” plan.
The announcement also called for stricter, punitive measures to prevent unfair licensing practices, safeguard against forced technology transfer and strengthen export controls.
Central to Washington’s ambition is the dual desire to reduce its trade deficit with China and to suppress contentious and unfair trade practices aimed at boosting Chinese technological advancement.
According to a seven-month-long Section 301 investigation that ended in March, the Office of the U.S. Trade Representative (USTR) decided that such discriminatory practices “put 44 million American technology jobs at risk.”
Chinese officials, however, see their technology transfer policies differently. On the same day that U.S. reignited tensions, the Chinese ambassador to the World Trade Organization (WTO) declared that technology transfer is a standard business activity and that China does not have a systematic, compulsory government practice for foreign firms to surrender their technology.
Chinese pundits ridiculed U.S. sanction threats as “calling a deer a horse,” i.e., Washington is using claims of foul play as a means of targeting Beijing’s successful manipulation of market access.
Despite these oppositional narratives, it is unclear whether Trump’s disciplinary measures will alter China’s ambition to increase its position as a global technological leader.
Reacting to renewed U.S. coercion, President Xi publicly reasserted its commitment to “Made in China 2025,” citing “self-reliance and innovation” as Beijing’s chosen economic precepts for guiding development and trade strategies.
Given the Chinese determination to put up a fight, it remains to be seen how Trump could force Xi’s hand. Furthermore, there might come a point where Trump will have to choose between reducing the trade deficit and countering “Made in China 2025.”
Reports indicated that the U.S. was making headway in increasing Chinese importation of American energy and agricultural products, which allegedly would reduce the trade deficit by $200 billion. Now, Beijing appears to be having second thoughts as Trump is backpedaling on the deal.
At the same time, fledgling attempts to compel China into increasing its purchase of American goods has had adverse effects for Washington’s relationship with other countries. If China were to purchase more goods from the U.S., it will accordingly purchase less of those goods from U.S. allies, such as the EU or Australia.
Due to these fears, Angela Merkel went to Beijing last week to reaffirm Beijing-Berlin trade relations and technological partnerships. Other countries would likely follow suit if Trump gets China to concede. For example, Australia is concerned about its beef export to China given its rising bilateral tensions.
If Washington’s impulsive decision-making does, in fact, negatively impact its allies, those partnerships will likely take a hit, and China may see more of these countries try to become strange bedfellows.
What really is hurting Washington is its inconsistency. Trump first declared a hardline approach for reducing its trade deficit and curtailing unfavorable tech policies, then seemingly retracted all threats and eased up on Chinese cellphone maker ZTE, and now is returning to the original antagonism.
From this, Chinese analysts have learned two important lessons about Trump’s Washington: Expect the unexpected, and do not ever expect Trump to be satisfied.
One Chinese news source proclaimed that “more concessions will not satisfy Trump’s appetite;” that the next tariff Trump seeks will not be for $50 billion, but for “a trillion dollars.” For this reason, many Chinese reports color Trump as a “contract breaker.”
This coloring may prove true yet again, however, given the timeline of the White House’s release of finalized announcements of tariffs and sanctions on China.
Trump has plenty of time to take back this most recent round of impositions, as the full list of imports hit by the tariff will be released on June 15, and the full list of restrictions and controls on exports will be released on June 30.
Even if Trump does backtrack on Tuesday’s announcement, Washington’s consistent inconsistency makes it difficult for Beijing to believe anything that the U.S. says. Judging by Beijing’s reaction to the Tuesday announcement, China is seeing through Trump’s negotiation technique and is determined to put up a fight.
Following the White House’s announcement, Chinese Foreign Ministry spokeswoman Hua Chunying warned, “We don’t want a trade war, but we aren’t afraid of fighting one.”
If a full-out trade war does indeed become an outgrowth of this week’s events, Beijing may just be right. For all of Trump’s cocky tweeting that “trade wars are good and easy to win,” Washington’s inability to streamline a consistent plan of attack is progressively rendering its threats meaningless and denigrating relationships with its allies.
This article was originally published in The Hill on May 31, 2018. See the original article here.