China Is Winning Trump's Trade War

Dennis P. Halpin

The Organization for Economic Cooperation and Development (OECD) reported on September 19 that “the global economy is set to grow at the slowest pace since the financial crisis, with business investment and trade hampered by an escalating dispute between the U.S. and China that could inflict even more damage over coming years,” according to the Wall Street Journal. That can’t be good news for President Donald Trump as he heads into a challenging re-election year. The last American president to play the “tariff card,” Herbert Hoover, who signed into law the Smoot-Hawley Tariff Act, paid a bitter price at the polls in the election of 1932.

Trump seems now to be belatedly looking for an exit ramp from his “get tough on China” strategy. The big question is: does Beijing have any great incentive to assist the American president or will it adopt a waiting game to cut a better deal with a possible Democratic successor after the 2020 election? Trump’s abrasive negotiating style seems to now have caught him in a dilemma. While his political base loves the red meat of “China bashing,” will they stick with the president through the resulting economic pain? 

The Trump negotiating style, as outlined most famously in his 1980s book The Art of the Deal, involves a very New York real estate brass knuckles approach—identifying your adversary’s vulnerabilities and playing upon them. There is also an element of being loudly aggressive in pushing things to the brink and then pulling back, hopefully in the process intimidating your adversary into accepting a deal which is more to your own benefit than theirs. This negotiating style is summarized in his book as follows: “MY STYLE of deal-making is quite simple and straightforward. I aim very high, and then I just keep pushing and pushing and pushing to get what I’m after.”

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