Bloomberg is reporting this week that the trade agreement President Trump signed with China less than four months ago “has gone from a cornerstone of his re-election bid to a potential political liability” as the pandemic increasingly sours U.S.-China relations.
The pact, which took effect in mid-February, appears to be falling short on a number of fronts, including Beijing’s promises of large agriculture and energy purchases. The administration is seen as “hesitant to ramp up the pressure or back away from the deal altogether, even as the rhetoric on both sides heats up.”
On Sunday night, the president raised concerns of a resumption of economic hostilities with China, calling tariffs “the ultimate punishment” for its response to the pandemic and threatening to withdraw from the trade deal if Beijing’s purchase pledges come up short.
As the U.S. economy craters, the president could find himself boxed in on China,” Bloomberg thinks. If he responds too forcefully amid a growing public outcry to punish China he risks hurting consumers and businesses already facing the deepest recession since the 1930s.
“The trade war was launched in good economic times,” said Scott Kennedy, a China expert at the Center for Strategic and International Studies. “Reimposing or expanding tariffs now with U.S. unemployment at over 20% would be far harder to justify economically or defend politically.”
At the same time, campaign advisers to former Vice President Biden are trying to exploit what they see as a weakness in the administration’s approach. In a recent TV ad, the Biden campaign accused the president of “rolling over” for the Chinese by taking their word that the virus was contained. Biden advisers argue that the catastrophe could have been better contained if the administration had been tougher on China instead of praising the trade deal.
The president argued on Sunday that he was tougher on China than past administrations and achieved an “incredible trade deal.” The political pressure to do something, however, is mounting within his own party as he denied reports last week that his administration is planning to cancel part of the U.S. debt obligations to China. He claimed that he “had many other ways to punish the country.”
On Sunday, he called tariffs the “greatest negotiating tool” but didn’t directly answer a question on whether he’d use them now against China for the country’s failure to limit the spread of the virus.
Over the past two years, the administration placed duties on roughly $360 billion in Chinese goods and China retaliated by hitting more than half of America’s exports. The agreement signed Jan. 15 imposed a cease fire in that trade war and was supposed to usher in a new era of commercial partnership.
Now, that warmth has faded as the countries feud over who’s to blame for a U.S. public-health crisis and an economy in a steep decline. With the Republican caucus calling for China to pay a price, the president “could be convinced to take action before the election,” Bloomberg thinks. “American voters and in particular his political base, want accountability,” said Jason Miller, a senior adviser to the 2016 campaign.
Whichever route the president takes, continuing to praise what he lauded as “the biggest deal anybody has ever seen” could backfire.
Two-thirds of Americans now have a negative opinion of the country where the virus originated, a recent Pew Research Center poll found. Seventy-two percent of Republicans see China unfavorably compared with 62% of Democrats.
The president’s messaging on China’s handling of the virus has recently become more aggressive though he’s been careful to distinguish his displeasure with the country from harsh comments about President Xi.
The current Bloomberg report focuses more on energy than on total trade. China committed to spend $52.4 billion buying U.S. energy over two years. The American Exploration and Production Council said last month that China had purchased “a de minimis amount of U.S. crude in the first months of 2020 while it has increased purchases of crude oil from Saudi Arabia and Russia.”
A senior U.S. Trade Representative official acknowledged last week that there have been hiccups related to purchases and that the administration been discussing ways to make sure the country stays on track with its commitments.
At the end of last month, Bloomberg reported that China is studying ways to accelerate purchases of U.S. farm goods to meet its Phase One trade deal commitments after the coronavirus delayed some imports. The expectation was that China might buy some ag commodities to build reserves.
The Trump campaign has long accused former Vice President Biden of being too soft on China. The anti-China message resonates more with voters, especially in battleground states like Wisconsin.
So, we will see. The phase-one trade deal is expected to be a prominent issue throughout the fall. “We think this will resonate across the country,” a Biden adviser told Bloomberg. Pressure to fulfill trade promises is likely to be a continuing issue as the administration works to ensure that the Chinese promises are fulfilled. Producers should to watch such efforts closely as they proceed, Washington Insider believes.
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