Expect Trump to Tighten Trade Enforcement Against China in 2018, Analyst Says
The Trump administration seems likely to ramp up trade enforcement efforts on China when it has more staff about a year from now, American Enterprise Institute resident scholar Derek Scissors said during a May 3 event hosted by Kelley Drye on the first 100 days of the administration. President Donald Trump and Chinese President Xi Jinping essentially punted on substantively addressing bilateral trade issues during their early April meeting the U.S.’s and China’s “100-day plan” (see 1704100008) reached during that meeting is more spectacle than substance, he said. But said the U.S. could increasingly press China on issues including intellectual property rights protection as the Trump administration will be facing more political pressure to act in 2018.
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The U.S. will likely have to “coerce” China for the best chance to drive fundamental change to that nation’s economy, and recent U.S. policy toward the nation hasn’t produced results, Scissors said. He added that Xi is “unambiguously” anti-competition, and that new trade rules likely wouldn’t constrain China’s dedication to its state sector.
Trade actions against China might not go unanswered, Peterson Institute for International Economics visiting fellow Rory MacFarquhar said during the panel. China is “adept and strategic about finding the points of maximum pain, usually political pain, to retaliate,” he said. U.S.-produced planes, soybeans and consumer products are obvious goods that China could target in any trade retaliation, MacFarquhar said. But China’s response would aim to convince the U.S. to de-escalate any trade dispute, and it would take action in that vein, he said. Because of China’s need for hard currency due to its balance of payments deficit and trade in goods surplus with the U.S., the U.S. would win any full-scale trade war with China, assuming that the Trump administration can solidly implement policy, Scissors said. “Since when do you have a White House that has the kind of vision to take pain … hold to it for several years, guide the Congress, show leadership, all the things that would be required in a serious trade conflict?” he said. “I don’t think they’re able to do that. I’m not sure they’re willing.”