The Manchurian President

Experts pan Trump’s ‘early harvest’ trade deal with China 
Trump is outplayed by Beijing as ‘gigantic’ agreement draws derision 
By Shawn Donnan in Washington

Mongolism: Donald Trump had touted the 'early harvest' deal as 'Herculean' 

From the moment he descended an escalator at Trump Tower almost two years ago and announced his presidential candidacy, Donald Trump has vowed to put the US back on a winning path in its trade dealings with China.
“I beat China all the time. All the time,” he declared to cheers that day in June 2015. 
But did Trump just get outplayed in his first trade negotiation with China?
A deal announced on Friday by officials in Beijing and Washington was billed as “gigantic” and “Herculean” by his administration in its efforts to reset the relationship between the world’s two largest economies.
It also marked a major de-escalation from Mr Trump’s bellicose campaign rhetoric and widespread fears that he might set off a trade war.
To former US officials, Trump advisers, business executives and other close watchers of the US-China relationship, however, this was a poor deal in which Beijing had simply reheated old promises.
They say it raises questions about the Trump administration’s strategic wherewithal and the very negotiating muscle the president has so often touted. 
“This is disappointing on many levels,” says Dan DiMicco, former chief executive of US steelmaker Nucor and a campaign adviser to Trump.
“We are rewarding China before stopping their massive trade cheating.”  
“They got played,” was the blunter assessment of one former US official.
The “early harvest” deal rolled out on Friday saw China agree to resume imports of US beef that were suspended in 2003, in a move that US cattle ranchers hailed as “historic” but which Chinese leaders had already agreed to last September.  
Beijing also committed to open its market to foreign-owned credit rating agencies and credit card companies — a pledge that addressed long-running US gripes but also resembled previous promises.
Ahead of China’s 2001 accession to the World Trade Organisation, it had agreed to open credit cards — or the broader market for electronic payments made in renminbi — to foreign-owned companies such as Visa and MasterCard.
For its part the US has agreed to encourage natural gas sales to Chinese buyers and opened the door to imports of cooked chicken from China. 
More importantly, it offered its endorsement for Beijing’s “Belt and Road” project to revive the ancient trade route to Europe by sending a delegation to a Beijing summit that started on Saturday. 
That move upended the arm’s-length approach of the Obama administration and left the Trump administration struggling to explain why Trump was embracing a project many see as Beijing’s latest effort to replace the US as a trading and military power in the Asia-Pacific region. 
According to the administration, the deal — part of a 100-day plan hatched by Trump and Xi Jinping during the Florida summit in April — will turn out to be the first of many.
But experts say that in its impatience to get a deal done, the new US administration had given up many key points of leverage that would have been useful for future negotiations. 
Meanwhile, in the name of reducing a trade deficit with China worth more than $300bn last year, the administration showed no signs of addressing bigger strategic economic issues such as Beijing’s efforts to force US companies to use Chinese technology or to buy US companies in key sectors. 
“[The Trump administration has] a single metric for trade success and that’s ‘have we reduced the trade deficit with a country?’, says Robert Atkinson, head of the Information Technology and Innovation Foundation, a Washington-based think-tank.
“And the Chinese fundamentally don’t care about the deficit. They are willing to give that away. What they care about is dominance in advanced industries.” 
Rufus Yerxa, president of the US National Foreign Trade Council, acknowledges that progress on some longstanding issues has been encouraging. 
“But there are a lot of major concerns about the way China is operating and the things that China does,” he says, pointing to Chinese restrictions on tech products and cloud computing. 
“It’s a bit concerning that those issues aren’t front and centre,” he says. 
Mr DiMicco says that with its promise to sell more natural gas to China, the Trump administration risked undermining what is now an important competitive advantage for US industry — cheap energy costs — and the manufacturing renaissance it has promised.  
“When the gas exports [to China] get large enough, which they will, it will drive up natural gas prices for our domestic manufacturers, and negatively impact our reshoring efforts,” he says. 
It also could have longer-term consequences for the US, he warns.
“We do not want to have a colonial-like trade relationship with China whereby we try to balance our trade by sending them raw materials and farm products and they send us increasingly high-technology products.” 

'We can't continue to allow China to rape our country'

In China-U.S. Trade War, President Trump Would Have Weapons
By KEITH BRADSHER

Is Xi Jinping a rapist?

SHANGHAI — As a candidate, Donald J. Trump aimed some of his most blistering words at China, declaring that “we already have a trade war” and suggesting that “we have the power over China, economic power.”
As president of the United States, Mr. Trump can use trade as a weapon, with the potential to drastically reshape the world’s two largest economies, as well as the companies, industries and workers who depend on their hundreds of billions of dollars in closely linked goods. 

The unsettling reality for Beijing is that Mr. Trump has a variety of ways to get back at China for trade practices that are unfair. 

China sells a large array of goods to the United States that he can aim at for higher tariffs.

The opportunities for China to retaliate would be more limited. 

In the most basic terms, China buys less from the United States.

But China could make some strategic strikes at targets like Boeing, American automakers and American farmers. 

Beijing exerts tight control over China’s airlines, for example, and sometimes steers contracts to Airbus, Boeing’s European rival, when officials feel that Washington is uncooperative.
“Boeing complains, ‘We have been pretty good friends with China. Why are we always a target?’” said He Weiwen, a former Chinese commerce ministry official who is now the co-director of the China-U.S.-E.U. Study Center at the influential China Association of International Trade in Beijing.
Or China could wreak havoc on the vast yet delicate supply chain behind a wide range of products like iPhones and auto parts. 

Six years ago, Chinese restrictions on exports of obscure yet vital minerals led to a global outcry by manufacturers.
Early indications are that trade could take a more prominent place on the White House’s China agenda, which under President Obama was dominated by Beijing’s territorial claims in East Asia and its influence over North Korea.

The night shift at a shoe factory that employs about 15,000 workers in Guangdong Province in southern China. Exports to the United States represent about 4 percent of the Chinese economy.

In a strong signal, Mr. Trump has turned to Dan DiMicco, a longtime steel executive and trade critic, to oversee trade issues during his administration’s transition. 

Mr. DiMicco writes a personal blog, liberally sprinkled with exclamation points, that blames America’s industrial decline on cheating by trade partners, particularly China.
“Hillary Clinton has claimed Trump’s trade policies will start a ‘Trade War’ but what she fails to recognize is we are already in one,” he wrote on his blog last summer. 

“Trump clearly sees it and he will work to put an end to China’s ‘Mercantilist Trade War’! A war it has been waging against us for nearly 2 decades!”
China over the last two days has emphasized that a "healthy" relationship would benefit both sides. 

On Thursday, Lu Kang, a spokesman for China’s Foreign Ministry, said, “It is in the common interests of both countries to develop a long-term, stable and prosperous trading relationship, and any American politician would take a policy in the interest of his country and the American people.”
Mr. Trump’s views veer widely from the free-trade positions of the Republican Party in recent years and signal a return to the more patriotic positions of the Reagan administration.

Since President Ronald Reagan, Republican and Democratic administrations have been reluctant to confront countries that were subsidizing or dumping exports, because of a risk of damaging diplomatic relations.
“This is the kind of stuff you learn in law school, and in the early days of your law career,” said Alan H. Price, a longtime lawyer for the American steel and aluminum industries at Wiley Rein.
When used, the measures were sometimes deemed ineffective.
In one rare example, President Obama used his powers to impose tariffs of up to 35 percent on imports of Chinese tires soon after he took office. 

The tariffs prompted China to impose steep tariffs on American chicken meat and automotive products. 

Both countries complained to the World Trade Organization, which mostly sided with the United States.
The case resulted in the United States producing more tires, but imports from other countries rose even faster. 

And the Obama administration later became more cautious about challenging China with trade restrictions.
Any trade actions by Mr. Trump would face limits.
This year, he mentioned imposing a tariff of 45 percent on all imports from China. 

But he later avoided specifics — and he has limited power to do so anyway. 

The law allows him to impose tariffs of no more than 15 percent, and for as long as 150 days, on all imports, unless a national emergency is declared. 

Other laws allow him to impose tariffs on targeted goods.
Should Mr. Trump want to signal an aggressive stance quickly, he could move against imports of steel and aluminum from China. 

The Obama administration has been preparing to file a World Trade Organization case against China over claims that it subsidized aluminum exports. 

And the United States, Japan and the European Union already complain that Chinese government subsidies have produced a bloated domestic steel industry that they say dumps millions of tons of excess goods on world markets each year.

Donald J. Trump: 'We can't continue to allow China to rape our country'

China is more vulnerable given the sheer amount of stuff it sells to America.
For more than a decade, China has consistently exported about $4 worth of goods to the United States for each $1 of goods that it imports.
Exports to the United States represent about 4 percent of the Chinese economy; American exports to China are only about two-thirds of 1 percent of the United States economy.
“We don’t have many things in the toolbox for retaliation, because we export more than we import,” said Mr. He, the former Chinese commerce ministry official.
Still, China could inflict pain on sensitive areas that provide American jobs, like Boeing’s jetliners.
Boeing declined to comment except to say, “We congratulate President-elect Trump and newly elected members of Congress and look forward to working with them to make sure we continue to grow the global economy and protect our people.”
General Motors and Ford Motor consider China a big contributor to sales.
They mostly manufacture in China to supply the domestic market.
But much of the design and engineering work is still done in the United States.
China could hurt the automakers by adopting domestic policies that help their big European rivals, notably Volkswagen and Mercedes-Benz.
Other American companies may be less opposed to trade limits than in the past.
Some American companies have been struggling to sell in China.
Beijing has steered contracts to Chinese telecommunications companies after Edward Snowden’s revelations about American intelligence gathering in China.
And Chinese state-owned enterprises have shifted much of their investment banking business from Wall Street to homegrown rivals.
American farmers have welcomed Chinese purchases, but it is unclear how badly they could be hurt by any trade action.
Chicken meat, soybeans, corn and other foodstuffs are commodities traded in world markets, and farmers are often able to sell elsewhere.
Chinese goods have long helped keep prices down for Americans.
But Chinese exports play a shrinking role in holding down prices as labor costs rise in China and as rivals like Indonesia, Vietnam and India expand manufacturing.
China’s biggest potential weapon is to disrupt the supply chains of multinationals by halting exports of crucial materials or components. 
But that could damage China’s reputation as a reliable supplier.
“I don’t think we will go that far at the moment, because there is a lot of room to negotiate,” Mr. He said.
“If we are forced too much, nothing can be excluded.”