In the latest issue of NR, Michael R. Strain and I criticize the administration’s strategy on trade with China and suggest an alternative. Scott Lincicome makes an additional and complementary point: President Trump’s Phase One deal with China lacks the usual incentives that get countries to make good on their commitments.
The United States has only one bad option to force that compliance—more tariffs on politically sensitive products (in an election year!), and the Chinese purchase commitments actually make U.S. exporters—especially those Great Patriot Farmers whom Trump needs for re-election—more dependent on the Chinese market (and, therefore, the Chinese government). So, the only party who might actually need this deal right now—the one with stuff to lose, especially in a recession—is Trump, not China.
This administration’s rhetoric toward China is tougher than that of its predecessors, but it is relying more than ever on Beijing’s voluntary cooperation.