Donald Trump Has Decided a Trade War With China Is a Bad Idea After All

US President Donald Trump addresses the 37th Annual National Peace Officers Memorial Service at the US Capitol in Washington, DC, on May 15, 2018. (Photo by SAUL LOEB / AFP)        (Photo credit should read SAUL LOEB/AFP/Getty Images)
Donald Trump, globalist?
Saul Loeb/Getty Images

Back in early March, after he’d thrown financial markets for a loop by announcing tariffs on foreign steel and aluminum, Donald Trump shared his thoughts on trade strategy with the American people. Trade wars, he assured Twitter users, “are good, and easy to win.”

Was it pure bluster? A sincere attempt at analysis? As always with Trump, one could only guess. But his words did not inspire confidence. The president seemed to be eager for confrontation, and clueless about potential consequences.

Soon, though, it became clear that the White House would take a softer, or at least narrower, approach to trade than the president’s rhetoric implied. Allies were granted exemptions to the metal tariffs, and it started to seem as if the administration was mostly gearing up for a one-on-one confrontation with China. This was also not ideal, in many ways. China responded to Trump’s provocations by announcing it would implement its own tariffs on American agricultural products, including major commodity crops like soybeans. But even amid the tit-for-tat threats, administration officials signaled that they didn’t really want a serious confrontation. Commerce Secretary Wilbur Ross downplayed fears of an all-out trade war. “There may be some firing shots over the bow and things like that, but I believe at the end of the day this will end up in a negotiated settlement,” he told CNBC.

Was this all an elaborate good cop, bad cop act, with Trump playing his usual unhinged role? Was the president being pulled in two different directions by his administration’s protectionists and free traders? A bit of both? Again, Trumpologists could only guess. But now, something unexpected has happened: The president himself is trying to de-escalate tensions with China in order to get some sort of trade deal done.

On Sunday, the president made a surprise Twitter announcement that he and China’s President, Xi Jinping, were working on a deal to save Chinese phone and telecom-equipment maker ZTE from a potential collapse brought on by a U.S. blockade of its business. The Chinese giant pleaded guilty and paid a $1.2 billion fine in 2017 to settle charges that it had violated U.S. sanctions on North Korea and Iran. Last month, the Commerce Department banned U.S. firms from shipping parts to ZTE, which it claimed had broken the terms of its settlement, leaving the company in peril—until Trump’s tweet, which appeared to take his own Cabinet by surprise.

While Trump’s sudden concern about jobs in China is touching, it’s not really what’s motivating his decision. As the Washington Post reports in a revealing story on Tuesday, Trump is determined to get some sort of trade deal done with China, in part because he needs Beijing’s help in negotiations with North Korea. But lately, talks have been going nowhere. Ross and Treasury Secretary Steve Mnuchin made zero headway during talks with Chinese leaders a couple weeks ago. Meanwhile, Trump “has been told in recent days that relaxing restrictions on ZTE was a ‘prerequisite’ to get the Chinese to engage in substantive discussions,” according to the Post. The president, who talked directly with Xi on May 8, apparently thinks easing up on the phone maker is a small concession.

One could look at all of this and conclude that, as usual, the Trump administration is in disarray, listing aimlessly based on the president’s whims and short-term goals. But if you’re a glass-half full kind of person, you could also look at this, and see a president capable of learning. Yes, Trump probably has some self-interest here (maybe some corrupt self-interest!), but he also seems to be realizing he can’t simply bully China into submission. Moreover, his apparent desire to notch a deal shows that he doesn’t want to create a trade battle merely for the sake of it. In other words, if he truly didn’t get it before, it now seems to be dawning on Donald Trump that trade wars are neither good, nor easy to win.