Trump to US Business: Find Trade Alternatives to China
President Donald Trump appears to be advising United States companies to avoid doing business with China. His reason: the trade deficits the US runs up with the People’s Republic.
The message came in a tweet yesterday, which read, “The meeting next week with China will be a very difficult one in that we can no longer have massive trade deficits…and job losses. American companies must be prepared to look at other alternatives.”
…and job losses. American companies must be prepared to look at other alternatives.
— Donald J. Trump (@realDonaldTrump) March 30, 2017
Trump will be meeting with Chinese President Xi Jinping next week in Florida and trade is sure to be on the agenda. It’s unclear what the president can or will do about trade deficits in a one-on-one meeting with his Chinese counterpart.
The president is expected to sign two executive orders on trade today. The first will have the Department of Commerce perform a study of trade with 16 countries, documenting and analyzing trade deficits on a product-by-product basis. The study would then be used to inform future trade policies, Commerce Secretary Wilbur Ross told reporters yesterday.
The second will bolster the ability of federal agencies to collect trade penalties that have been imposed by Commerce and the International Trade Commission. Peter Navarro, an assistant to the president on trade, said that $2.8 billion in such penalties remain uncollected.
Asked by reporters whether the executive orders, in light of Trumps tweets, were meant to put China on notice in advance of next week’s anticipated meeting between the two leaders, Ross said that it was about the president fulfilling campaign promises. Navarro remarked that the executive orders were “not about tweets.”
The president’s tweets and actions are consistent with the rhetoric he first employed on the campaign trail: blaming China and its unfair trade practices for trade deficits that supposedly cost US factories and jobs. Economists say that trade deficits are largely irrelevant to economic health and the US and the World Trade Organization are active in curbing trade abuses, whether by China or some other country.
The US conducts more trade investigations and has filed more WTO complains by far than any other country on earth. Less than three weeks ago, the Commerce Department imposed the largest trade penalty ever on a Chinese firm and has been active in prosecuting unfair trade practices by Chinese companies before and since Trump took the oath of office.
Besides all that, US business and consumers depend on China for a wide array of products. It’s hard to imagine Trump’s base of supporters reacting positively when the prices of sneakers, sportswear, and household goods skyrocket because they are no longer sourced from China.
As far as his meeting with Xi Jinping goes, it’s hard to fathom how the president can negotiate his way to a better trade position, from his perspective, as a result of that meeting. He could hit China with a punitive blow, as he arguably has discretion to do under some US trade laws, and it’s possible that the economic nationalists in his inner circle are urging him to do just that.
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