Sometimes political adversaries make unique bedfellows. Take President Trump and Senate Minority Leader Chuck Schumer. The two could not have more varied views of the world at large, yet they are both in agreement concerning China and their unfair trade policies.
Prior to Trump’s announcement that he was slapping a 25 percent tariff on hundreds of billions in Chinese goods, Schumer offered encouragement. He tweeted, “Hang tough on China, @realDonaldTrump. Don’t back down. Strength is the only way to win with China.”
That took courage for Schumer to do publicly. He realizes this is not a trade war that the president started. It has been brewing for many decades and China is most definitely the perpetrator.
China has been stealing our intellectual property, forcing our companies to transfer technology as a price of doing business in China and subsidizing state-owned enterprises to prevent U.S. businesses from competing in dozens of sectors of the Chinese economy.
This has been Chinese policy through nine U.S. presidents. But unlike his predecessors, Donald Trump is fighting back. The Chinese thought they could outwait Trump and they were dead wrong. Unlike past presidents, Trump is not a politician, but a businessman. He is not beholden to any lobbying group or political organization, unless you think he really is a Republican, which he is in name only.
Chinese negotiators believed they had leverage because Trump would be concerned about his economic gains over the last 30 months. They were wrong. While the U.S. enjoys a surging economy and record-low unemployment, the Chinese reported the slowest economic growth since 1990. In fact, China is losing manufacturing jobs. Their workforce is becoming smaller and less productive.
Trump is taking advantage of China’s weaknesses. He knows he is in a far better position than his counterpart, Chinese President Xi Jinping. Xi most certainly is desperate for a deal of some kind.
Xi Jinping thinks he can wait Trump out as American farmers become alarmed about stiff farm tariffs from China. He thinks he’s in a win-win situation. But Trump is a seasoned negotiator who is not about to blink no matter what the polls say.
The impact of Chinese tariffs may not be nearly as bad on American consumers as the Chinese had hoped. The low rate of inflation neutralizes much of the costs of higher prices from tariffs. If the standoff continues, American consumers will simply avoid most Chinese goods that can easily be substituted for other countries’ rival brands.
A growing, low-inflation economy can handle a trade war with China. The objective is to force China to stop subsidizing large sectors of its economy and to cease its theft of U.S. intellectual property. That can only be accomplished with the firm support of American corporations doing business in China.
Trump is right to take this firm stance. China is an economic predator that must be forced to fall in line with the rest of the world. Only the U.S. has the economic power to force this showdown.
It should be gratifying to a politically polarized America that Chuck Schumer sees the importance of this issue on a bipartisan basis. Good for him.