Trump’s Stratagems towards Trade War with China
Zinjin Media Think Tank
Associate Professor of School of History, Nanjing University
The trade disputes between China and the United States have been turbulent for a few moments. Although after three rounds of negotiations, the trade disputes still exist divergence, the consensus is gradually reached and the crisis is being dealing with.
Unexpectedly, on May 29, the U.S. government suddenly announced that it would propose 25% tariff on approximately 50 billion U.S. dollars of goods imported from China, and published its proposed list on June 15. It announced that it will slap the tariff from July 6th, 2018. What's more, Trump issued a statement on the night of June 18, which, on the basis of the proposed list worth of 50 billion U.S. dollars announced earlier, the U.S. government threatened to propose 10% tariff on Chinese products worth of 200 billion U.S. dollars in order to retaliate against China’s unfair practices that Chins is not intended to change and purchase US intellectual property and technology." It is really ups and downs.
The stratagem of seeking interests for the country should focus on strategy. Currently, why would Trump have such crazy act? Is Trump an unreliable man like other people evaluated? Or is it what he self-proclaimed that he is familiar with "art of trading" or is it a smart act of trade mentor? However, considering his most proud book Art of Trading published in 1987, we seem to get a glimpse of inkling. In this book, he summarized several strategies for negotiations, mainly including “Think Big”, “Know Your Market”, “Use Your Leverage”, “Get the Word out”, “Fight Back” and “Deliver the Goods” etc.
The tactics of Trump in the Sino-U.S. trade dispute seem to be incompatible with the pattern of these “arts of trade”. The first is to make an excessive demand for the negotiation goal, increasing from 50 billion to 200 billion. And the White House even threatened that "If China again raises tariffs to retaliate, the United States will propose tariffs on another 200 billion U.S. dollars of goods." However, in 2017, the total amount of China’s exports to the United States were 429.8 billion U.S. dollars. If the trade war begins, it means that the world's two largest trading nations and the two largest economies that account for 60% of the world's total GDP will almost shut their doors to each other. According to Trump, high asking prices can change the other party's psychological expectations during negotiations and set "anchors" that are beneficial to their own side. Sun Tzu’s Art of War said: knowing the enemy and yourself, you can fight a hundred battles and win them all, Clearly, Trump understands this well. Objectively speaking, in the trade war between China and the United States, his analysis of the advantages and disadvantages of each other is very detailed and profound. For example, he never proposed the tariffs on textiles, clothing, shoes and hats. Although in 2017, the amount of China’s textile exports to the United States totaled as much as 45.3 billion U.S. dollars, these were almost all Chinese trade surpluses with the United States, accounting for almost 1/5 of China's total trade surplus with the United States. However, Trump knows that China's inexpensive and fine clothing and hats are of great significance to the low and middle classes in the United States who are his supporters in the election. The mid-term elections will be near on the hand, and even if Trump is unreliable, he will never be too foolish to lift a rock only to drop it on his own feet. However, as for electronic information and high-tech products which are the “soft spot” for China's trade growth point with the U.S., they showed no mercy. The latest 50 billion U.S. dollars proposed list which is directly against such commodities is also related with his strategy of “Use your leverage”. Undoubtedly, "ZTE Incident" is one of the acts of his strategy. But it is indeed a sore spot for us, and we still have to chew on this bitter fruit.
Other strategies such as "Get the Word out”, “Fight Back”, and “Deliver the Goods” are deeply reflected in Trump's trade war with China. Trump has been immersed in the media industry for many years and is well versed in the way of mass communication. Not to mention that he had already won the "laurel" of "governing the country by Twitter". Almost at every important time point of Sino-U.S. trade disputes, he would speak through Twitter so that many domestic and foreign capital market traders have to pay attention to Trump's Twitter at any time, and change trade strategies according to its latest content. What’s more, the US Securities and Exchange Commission had slight complaint about it and believed that it interfered heavily with the market. However, it is obvious that Trump's purpose is not to intervene in the market, but to grasp the dominant power of public opinion through vivid and real-time remarks, and to “extremely pressure” the negotiating opponents. The “Fight Back” and “Deliver the Goods” are exactly his strategies for blackmail. Raising the stakes greatly in the negotiations often undermines the will of the opponents and make them give up the resistance, thus playing the miraculous effect of “defying the enemy without fighting”. This “margin of war” policy has recently made Trump success on the issue of Korean Peninsula. And therefore, he began to use it as a magic weapon.
Facing with Trump’s trade plan against China, how do we respond? In Jin Yong's martial arts novel The Dragon Oath, Gusu Murong has a stunt called "an eye for an eye, and a tooth for a tooth". As for Trump’s self-proud Art of Trade, we also have to respond quickly and effectively according to the current situation and use the spear to attack the shield. For his "salt price", we should only bargain down-to-earth. According to solid and reliable data, we can refute the fallacy of the “unfair” trade between the United States and China. It is even more necessary to fully introduce WTO rules for world trade, rather than talk about Sino-U.S. trade in terms of Sino-U.S. trade, talk about trade deficits in terms of trade deficits, and talk about figures in terms of figures. If that is the case, it will be hard to extricate ourselves from Trump’s discourses. We may take the words out and publicize U.S. large relaxation of trade restrictions on China and China’s restrictions on investment towards the United States. We should publicize it not only to the White House and the National Congress, but also to the American public, profoundly revealing the truth about the US trade deficit with China. But we should firmly stop his wishful thinking of charging an exorbitant price to make a profit in troubled situation. In fact, a spokesperson for the Ministry of Commerce of the People's Republic of China has pointed out that American “practices to extremely pressure and blackmail have deviated from the consensus reached by the parties on many occasions and have also disappointed the international community. If the United States loses its rationality and publishes its list, the Chinese side will must resort to comprehensive measures combining quantity and quality so as to make strong countermeasures."
We should calmly deal with Trump's strategy of “Use your leverage”, On the ZTE's issue, it has not only enabled the U.S. government to receive more than one billion U.S. dollars in fines, but also forced ZTE to severely dispose relevant personnel and completely reorganize the board of directors. It is also said that they will also send supervision personnel to ZTE. Facing with this humiliating "unequal treaty" which allowed the U.S. to take full advantage of the benefits, Trump not only didn't restrain himself, but rather said that giving ZTE a break is for the sake of Chinese leaders. Being too tangled with the gains and losses is precisely trapped in Trump’ s scheme. To take up the vital point in the trade war should be our strategy to counteract Trump’s trade blackmail. We should adopt targeted steps in agriculture, aircraft, energy and other fields, and strive for a hit. Raising the tariffs on automobiles that U.S. exported to China will undoubtedly allow multinational auto companies that have coveted the Chinese market to shift more production to China, which will make Trump's promise – to bring back job opportunities to the United States – become vaporous.
Of course, the trade war is quite upset which bites off one’s own head. However, a country will inevitably be in danger if it forgets to prepare for combat. And sometimes it is only a last resort to prevent a war by waging another. Especially for the person who pretended to sleep, no matter how loudly you call him would not wake him up. Only when his buttocks catch fire, he would have to wake up. In the Sino-U.S. trade disputes, it can be tolerable if Trump’s all sorts of deceit and pressure are only negotiating tactics and his ultimate goal is to reach a deal. However, if he is overconfident to neglect the bottom line and play his own one-man show, then he will definitely fail.