Trump's unpredictability - a weakness China can exploit, or a risk it can't ignore? | DW News

Key Concepts:

• Tariffs: Taxes imposed on imported goods.
• Trade War: An economic conflict where countries impose tariffs or other trade barriers on each other.
• De-escalation: Reducing the intensity of a conflict.
• Structural Issues: Fundamental problems in the US-China economic relationship.
• Mercantilist Strategy: An economic policy focused on maximizing exports and minimizing imports.
• Decoupling: Separating or reducing economic ties between countries.
• De-risking: Reducing exposure to potential risks, particularly in economic relationships.
• Reciprocal Tariffs: Tariffs imposed in response to another country's tariffs.
• Unpredictability: Lack of consistency or reliability in policy or communication.

1. US-China Trade War and Tariff Imposition

• President Trump initially imposed tariffs on global markets, then focused on China, leading to a trade war.
• China retaliated with its own tariffs.
• The US economy is showing signs of strain, prompting the White House to consider de-escalation.
• Trump claimed a 90-day pause for countries not retaliating, doubling tariffs on China for retaliating.
• Trump expressed optimism about reaching a deal with China, suggesting tariffs wouldn't remain at 145%.

2. Conflicting Narratives on Trade Negotiations

• Trump claimed active engagement with Beijing on tariff reduction.
• China's Ministry of Commerce denied any ongoing trade negotiations with the US, calling Trump's claims "groundless" and "fake news."
• China insists the US initiated the trade war and should remove unilateral tariffs for dialogue to resume.

3. Expert Analysis: Glenn Tifford's Perspective

• Glenn Tifford from Stanford's Hoover Institution suggests that while there might be daily contact, it may not be substantive negotiation.
• He notes that calming the markets was a valuable outcome of Trump's remarks.
• He believes real trade deals take time, often years, and deeper commitments are needed.
• Tifford cautions against overinterpreting Trump's comments without evidence of deeper commitments.
• He highlights the lack of coordination between messaging and policy within the Trump administration.

4. Structural Issues and the Failure of the 2020 Trade Deal

• Tifford emphasizes the profound structural issues in the US-China economic relationship, built up over years.
• Some in the administration view the 2020 trade deal as a failure due to unfulfilled commitments.
• He argues these issues cannot be resolved with mere words or gestures.

5. Tariff Reduction Numbers and Negotiation Tactics

• The White House floated the idea of lowering tariffs from 145% to 50-65%.
• Tifford is unaware of a deliberative process behind these numbers, viewing them as positioning or posturing before a business deal.
• He suggests it's a way to "size up the other party" and enhance negotiating position.

6. China's Perspective and the Global Trading System

• China claims the US started the trade war and must remove tariffs to fix the situation.
• Tifford questions whether the US and China are even having the same conversation, framing it as a longer conflict.
• He argues that China has not truly opened to the world despite claiming to do so for 50 years.
• He asserts that the global trading system cannot survive if one of the largest economies plays by mercantilist strategies.
• China has used trade levers to punish countries that displeased it.

7. Unpredictability and Trust in Negotiations

• Tifford acknowledges Trump's unpredictability as a potential tactic but warns against overuse.
• He quotes George Schultz: "Trust is the coin of the realm," arguing that unpredictability corrodes trust.
• He notes that allies and markets crave predictability for defining common ground and working towards common goals.

8. Security Implications and Decoupling

• Tifford highlights the security implications of the tariff policy, particularly regarding critical and emerging technologies.
• He notes the US has security commitments in Asia, making the security question paramount.
• He links economics and security, as well as China's economic support of Russia in the Ukraine war.
• He points out the differing perspectives between the US and Europe, with the US increasingly focused on China and Europe on Russia.
• He mentions the Pentagon's war games where China wins, citing US neglect of military power.
• He suggests that some in the White House are considering hedging for the market risk and financial shock of a potential conflict in Asia.
• He states that decoupling would be painful, but de-risking is a wise strategy given rising tensions.

9. Future Outlook and Rebalancing the Global System

• Tifford hopes for a new equilibrium with China and global partners.
• He believes the post-1945 and post-1991 international system needs rebalancing to reflect the current global balance of power.

10. Synthesis/Conclusion

The US-China trade war, initiated by US tariffs and met with Chinese retaliation, is marked by conflicting narratives and deep-seated structural issues. While the US signals potential de-escalation, China denies ongoing negotiations. Experts like Glenn Tifford emphasize the need for substantive commitments and caution against over-reliance on unpredictable messaging. The conflict has significant security implications, prompting discussions of decoupling and de-risking. Ultimately, the goal is to rebalance the global system to reflect the current distribution of power, but the path to achieving this remains uncertain.