Trump’s new China tariffs carry rewards and risks – Washington Examiner

Xi Jinping must always know that the United States is not weak or open to appeasing him. But the new 10% U.S. tariffs announced on $300 billion in Chinese goods by President Trump on Thursday carry significant risks, in addition to their potential rewards.

Until Thursday, China was increasingly confident of Trump’s declining confidence in his ability to force a deal. The Chinese are exceptionally astute about U.S. politics and sensitive to the electoral considerations influencing Trump’s management of the economy. And of course, the Chinese president has little regard for domestic opinion.

But by escalating in the trade fight, Trump is showing Beijing that he will risk his own electoral position in order to win. That will factor in Xi’s mind in that it’s still a long way to January 2021, or even January 2025. Moreover, Trump is gambling with good reason that Beijing will want some kind of deal by that point. After all, Trump is being briefed that the Chinese economy is significantly weaker than anyone is admitting openly. These new tariffs will thus impose a punitive cost on Xi’s economy, with the secondary benefit of encouraging further foreign capital evacuation from China. It is worth noting here that the ongoing protests in Hong Kong also trap Beijing between its impulse to dominate and its desire to placate global investors. The U.S. should take greater advantage of that reality.

The risks, however, are equally real.

While the U.S. economy remains strong in employment rates and consumer markets, it suffers increasing strains from the China trade war. My father, a global financial analyst, notes that U.S. capital investment and investor confidence is collapsing. At some point, those factors will reverberate within the broader economy. China is banking on that reverberation occurring sooner rather than later. At that point, Xi hopes, Trump will buckle and agree a deal on Beijing’s terms.

Ultimately, there are two overarching truths that Trump and his Democratic 2020 opponents must embrace: China poses the preeminent threat to U.S. global order and must be defeated in that effort, and U.S. intellectual property must not be sacrificed under any new trade deal. Beyond that, let’s see the art of the deal in action.

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