A year and a half ago I had a piece about Trump’s firebug behavior, where he whips up a crisis which he then resolves by dialing down what he did himself. Such behavior is not only deceptive, but frequently also damaging—stopping the fire doesn’t necessary bring everything back to zero. North Korea was the prime example in that earlier piece. In that case, even after we turned down the fire we had legitimized the regime, encouraged nuclear proliferation, and basically stopped caring about the dangers they represent. It remains shockingly easy to get the press to fall for these firebug scenarios.
At the time I worried that the same was going to happen with China: “there should be no problem getting the kind of PR-oriented agreement we got from Kim. Market access can be as murky as denuclearization.”
It took longer than I expected (he didn’t do it for the midterms, he did it for the presidential election), but that’s what we’ve got. The Phase 1 Agreement dials down Trump’s own trade war with a declaration of victory that lets everyone celebrate the peace. In exchange for Trump’s toning down the trade war, the agreement combines one-shot questionable purchases with a number unenforced statements of principle (think denuclearization). There is no substantive progress on any of the issues that started the trade war. And for subsequent phases, as noted before, our leverage is diminishing every day.
We’ve been sold another firebug triumph—and in this case the damage is serious. The trade war delivered nothing and fractured the world in the process. This is a failure of policy with real consequences. It is horrifying that the press coverage can’t get beyond speculation about what might be good or bad in the vacuous agreement itself. China is too important for this. The issue is not the fire-ending nonsense; it is the damage done.
On that subject I summarized my feelings this morning in a comment to David Leonhardt’s article in today’s NY Times: “What Americans Don’t Understand About China’s Power”:
This is a good piece, but it understates the problems with our China policy.
We have issues with China, but a unilateral trade war is not going to resolve any of them. Our recent phase one agreement is a case in point—like our agreement with the North Koreans it does little more than tone down the belligerence we created: questionable one-shot purchases and unenforceable statements of principle.
The trade war itself, however, has lasting consequences. Trump’s threats to destroy the Chinese economy legitimized Chinese hardliners’ position that the West was still colonialist and not to be trusted. Complete independence and self sufficiency were imperative. Intellectual property theft went way up.
Our current Chinese policy is nothing more than unproductive grandstanding. It is not “finally getting tough with the cheats”. Obama actually reduced intellectual property theft and the balance of payments deficit, rather than the opposite. Same for Chinese behavior on climate change.
If we actually want to make progress, it needs to be together with our allies (to double leverage) and in the context of international rules of fair trade—rather than what we think we can shove down their throats to maintain our dominance. [Rules of trade have more credibility when we’re willing to apply them to ourselves!]
The trade war does not resolve issues, does lead to a fracturing of the world (with reduced security, prosperity, and US influence), and—as Leonhardt says—distracts us from the things we really need to do.