Within Trump’s Trade Factions, Nations Look for a Friendly Face
Posted June 3, 2018 6:58 p.m. EDT
SHANGHAI — As the United States challenges Europe, China, Canada, Mexico and much of the rest of the world over trade, deep factionalism within the Trump administration has flummoxed both U.S. allies and rivals. The White House strikes a conciliatory tone one day and a militant one the next, often depending on which Trump advisers are in favor.
Increasingly, leaders in other countries are asking who is calling the shots: the globalists, the nationalists, the trade hawks or someone else?
To a degree, the mixed messages reflect the negotiating tactics of a president who likes to keep the other side off balance. Even while his team was in Beijing this weekend, President Donald Trump, in a Twitter post, suggested a confrontational approach, calling out China over the trade imbalance. The two sides made little progress in discussions.
The inconsistency has spurred international leaders to court Trump officials who they think will offer a sympathetic ear, rather than the White House as a whole — a divide-and-conquer approach that could make trade deals harder to strike. It has also eroded the belief among many leaders that the Trump administration will keep its word.
“We have to believe that at some point their common sense will prevail,” Prime Minister Justin Trudeau of Canada said in a tweet, referring to the American public, after the Trump administration’s latest move on tariffs. “But we see no sign of that in this action today by the U.S. administration.”
Even the Chinese government, which typically couches its most aggressive statements in oblique diplomatic terms, is increasingly talking about the administration with the rhetorical equivalent of an eye roll.
“In international relations, every time you change your face and turn your back is another loss and squandering of your country’s credibility,” Hua Chunying, the Chinese Foreign Ministry spokesman, said at a briefing in Beijing on Wednesday.
Just in the past week, U.S. trading partners have grappled with a new wave of aggressive moves. On Thursday, in the decision that prompted Trudeau’s tweet, the Trump administration said it wouldn’t exempt Canada, Mexico or the European Union from its new steel and aluminum tariffs, after postponing the move twice.
The Trump administration has also said it would move ahead with tariffs on $50 billion in Chinese-made goods. A week before, a senior official had suggested the tariffs would be suspended. U.S. officials also walked back the possibility that Trump would lift crippling trade limits placed on ZTE, a Chinese telecommunications company, for violating U.S. trade restrictions on North Korea and Iran.
Talks between the two counties in Beijing over the weekend, which were led by Commerce Secretary Wilbur Ross, ended in an impasse. The Chinese refused to commit to buying more American goods, without the United States agreeing to back away from imposing further tariffs on Chinese exports.
“If the United States introduces trade measures, including an increase of tariffs, all the economic and trade outcomes negotiated by the two parties will not take effect,” China said in a statement.
Foreign negotiators are now seeking friendly faces within the White House in hopes that those people’s arguments will end up carrying the day.
Chinese officials have aggressively tried to woo Steven Mnuchin, the Treasury secretary, and Ross, say people familiar with the Chinese negotiating position, who spoke on condition of anonymity because the talks are sensitive. Both men have extensive business and Wall Street backgrounds, and Chinese officials believe they would be receptive to arguments that China’s big trade surplus with the United States stems largely from economic factors rather than unfair trade practices.
The Chinese officials have courted Mnuchin, Ross and their staffs with small group meetings and telephone conference calls, the people familiar with the Chinese position said. They have put less effort into reaching out to Robert Lighthizer, the administration’s top trade official, or Peter Navarro, a Trump adviser who co-wrote a book called “Death by China," to the same degree. In essence, Chinese officials are wooing Trump administration officials they see as globalists while trying to isolate those they see as hard-liners. China can justify that stance by pointing to rank. By diplomatic protocol, Mnuchin and Ross are more senior, although neither runs an agency with direct responsibility for trade negotiations.
The people familiar with Chinese economic policymaking say that Beijing officials became accustomed to addressing major trade and currency concerns through Treasury, which took a leading role on Chinese economic issues during the presidencies of Barack Obama and George W. Bush. But Trump has largely abandoned that framework, elevating Lighthizer and obscuring the question of who is running trade policy.
Conversely, European trade officials feel they have a friendlier audience in Lighthizer. They believe he has focused most of his attention on China, whose government is managing an ambitious project to build up sophisticated manufacturing and high-tech industries that could someday rival U.S., European and Japanese competitors. Officials in Europe believe that focus could make him more amenable to a deal to help form a united U.S.-European front against China’s industrial ambitions.
European officials are frostier when it comes to Ross and to Trump himself, according to a senior European diplomatic official who requested anonymity because the discussions are private. They see the two as narrowly focused on getting European countries to buy more U.S. goods over the short haul, the official said — a strategy they perceive as aimed at giving Ross and Trump photo opportunities at U.S. steel factories.
European negotiators regard that stance as an unsophisticated, zero-sum view of trade, the official said, in which the country that sells more goods to its partner is the winner — an outlook that makes a trade deal difficult to achieve.
Even when foreign trade officials wring deals out of their relationships with individual members of the administration, the agreements can quickly fall apart, as China has found to its frustration.
Last year, Chinese officials presented a plan to Ross under which China would cut its voluminous steel capacity in return for avoiding proposed tariffs. Ross supported it, but it did not satisfy Trump, and the administration ended up imposing tariffs on steel imports from many countries, including China.
Then, during Trump’s visit to China in November, Ross orchestrated deals that administration officials claimed were worth $250 billion, although their true economic value was far less. The peace that effort bought didn’t last. The United States has since ramped up its criticism of China’s industrial ambitions and threatened to impose tariffs on more than $150 billion in Chinese goods.
China’s efforts to court Mnuchin have also led to frustration, despite initial signs that they would pay off. Mnuchin has suggested publicly that Chinese moves to open up the country’s car market and financial services to international competition could be enough to allay the Trump administration’s trade concerns. Two weeks ago, Mnuchin said the Trump administration was “putting the trade war on hold.” On the thorny issue of ZTE, Mnuchin said that the United States had not meant to “put ZTE out of business.”
Then last week, following intensifying pressure from Congress, the Trump administration said it would push ahead with tariffs on $50 billion in Chinese goods and signaled a potentially tougher stance on ZTE. Navarro also publicly contradicted Mnuchin’s comments about suspending the trade war.
The shifts appear to have only stiffened the resolve of U.S. trading partners. After the United States imposed tariffs, Canada and Europe responded quickly Thursday with their own threats of retaliation. Chinese officials, meanwhile, are still vowing to go through with their planned industrial upgrade, called Made in China 2025, which they see as essential to the country’s security and well-being.
In China, in public discussions and on social media, Trump’s shifts often play as a sign of instability. Chinese officials, perhaps more than their counterparts elsewhere, strive to strike a consistent message to give the world the impression of a unified government.
“In Chinese culture, when a political leader says something, you mean something,” said Gary Liu, the president of the China Financial Reform Institute, a research group in Shanghai. “China is very upset about the changing attitudes.”