Joe Biden’s America – How China Tricked Trump On Trade

One of the relatives said, “I only see you at weddings.”

In fact, the relative was correct. At a wedding, everyone just smiles and exchanges pleasantries. In between weddings, nothing really happens – but everyone feels good about having seen each other.

President Trump’s relationship with China began somewhat like a wedding. The first celebration started with arrival of President Xi at Mar-a-Lago in Palm Beach on Thursday April 6, 2017 – followed by dinner with President Trump.

Secretary of State Rex Tillerson was there to discuss North Korea and President Trump was interested in a deal to reduce the trade deficit between the two countries.

When the meetings concluded on April 7, President Trump said: “The relationship developed by President Xi and myself, I think is outstanding. We look forward to being together many times in the future. And I believe lots of very potentially bad problems will be going away.”

The next time the two sides would meet was on November 8^th of 2017 when a State visit was organized in Beijing. Again, the festivity was like a wedding.  President Trump said to President Xi: “My feeling towards you is an incredibly warm one.” He also said: “there’s great chemistry, and I think we’re going to do tremendous things, both for China and the United States.”

China had completed the ultimate ruse. Two wonderful festive occasions, and President Trump was loving it. “My good friend President Xi,” he would say. Meanwhile, from China’s perspective, the U.S. trade deficit would be slow to resolve, the China Sea would be theirs to explore, cultural “retraining” would continue in remote provinces of their country – all taking place while President Trump would be generally feeling good about China, but busy entertaining the US Stock market with ideas about less business restrictions, less taxes, and more tariffs. The focus of the White House would be off China – just like the break time between the weddings. Essentially, China would be fairly free to do what they wanted.

The concept of the US-China trade deficit was easy to understand. America continued to buy more from China than we sold to them. President Trump planned to alter that equation. He said: “I don’t blame China. Who can blame a country for being able to take advantage of another country for benefit of their citizens? I give China great credit.”

President Trump stated (while still in 2015 campaign mode) that his planned interactions with China would be business-like. He said: “You can win against China if you’re smart. But our people don’t have a clue. We give State dinners to heads of China. I said, why are you doing state dinners for them? They’re ripping us off left and right. Just take them to McDonald’s and go back to the negotiating table.”

History, of course, would prove that the Trump methodology did not work. The entire process negatively affected the American consumer, wholesaler, retailer, and brand. The trade deficit has not been repaired mechanically by adding tariffs. China did not pay the tariffs. When China retaliated against U.S. farmers with tariffs of their own, President Trump bailed our farmers out with $28 billion that he took from American consumer tariffs that the government had collected.

China did eventually come to the table with a Phase One Trade Agreement (1/15/2020), but the record shows that it is highly unlikely that they will meet their first-year commitment of purchased product. In fact, if President Trump is re-elected, many believe that he will withdraw from the Phase One Agreement and issue even more tariffs.

A Biden Administration would handle trade differently. While the “China containment” goal might be similar, the methods to achieve them would likely be contrasting. Former Vice President Biden apparently does not like tariffs as a means to resolve a trade disparity. In an interview with NPR’s Lulu Garcia-Navarro, Biden said (about tariffs): “Hey, look, who said Trump’s idea was a good one? Manufacturing has gone into a recession. Agriculture lost billions of dollars that the taxpayers had to pay. We’re going after China in the wrong way.”

Meanwhile, while President Trump rescinded America’s proposed Trans-Pacific Partnership (TPP) on his first day in the Oval office, China continued to develop their regional trade agreement called the Regional Comprehensive Economic Partnership (RCEP). The new China trade agreement could be signed by mid-November and would be ready for implementation in late 2021. The agreement will include 16 member countries, 48% of the world’s population, and 33% of the world’s GDP. The United States will not be a member.

The original Trans-Pacific Partnership agreement was led by President Obama for the United States, and would have included 12 countries and 40% of the world’s GDP. China was not a member.

Vice President Biden was for TPP and then (in campaign mode), he reconfigured his approval. He said: “I would not rejoin the TPP as it was initially put forward. I would insist that we renegotiate pieces of that with the Pacific nations, so that we could bring them together to hold China accountable.”

When President Trump tore up the TPP plan in 2017, President Obama’s former U.S. Trade Representative Michael Froman essentially said that we just handed China the keys to the castle, and America had signaled to Pacific countries – that we are withdrawing from our leadership position. The RCEP agreement, when signed, will now be the largest free trade agreement in the world.

Most China observers understand that China has just unveiled it 14^th five-year economic and social development plan – with a focus on technology. Back home in America, the Trump Administration rolled into full campaign mode without ever releasing a new platform for the Republican Party. One now looks at China as a country that has a plan, and then looks at the current administration that hasn’t been able to articulate one.

This entire situation is somewhat reminiscent of the literary character Rip Van Winkle. It was Van Winkle who dozed off in the woods, only to wake-up several years later – to learn that the world had changed.

There is a Chinese proverb about this situation that probably sums up our world of trade:

“When the wind of change blows, some people build walls, others build windmills”