Trump needs a trade win so bad, Xi can taste it

Cristina Alesci
Nov 8 · 2 min read

After a series of stinging political losses, Trump is trying to wrangle a win from China, which he’s repeatedly attacked and accused of “raping” the US.

Since Trump started an economic war with China, it has repeatedly demanded — and the US has repeatedly denied –the lifting of tariffs without significant concessions.

Under phase one of the US-China trade deal, the US and China would simultaneously roll back some of their tariffs on the other’s products. Phase one is also supposed to deal with intellectual property and financial services, and China would also commit to buying US agricultural produce.

Now, Trump appears to be on the cusp of caving by rolling back some tariffs without substantive concessions.

Why the shift in recent weeks?

Consider the political backdrop right now: The impeachment inquiry is heating up, Republicans have just lost key elections under Trump’s leadership and 2020 is fast approaching with little relief for one of Trump’s key constituencies: the American farmer.

The Chinese couldn’t be happier. They know Trump needs to ease the pain he’s inflicted on US farmers and, to a lesser degree, shield the US consumer from absorbing any of the costs. And that time is now, especially for farmers, who have gotten some money in the form of bailouts but are still hurting.

Farmers start taking out loans for upcoming planting in February. Without clarity on the trade front, they won’t get the capital they need to survive, analyst Steve Pavlick told me today. He was former Deputy Assistant Secretary Legislative Affairs at the Treasury Department for about two years under Trump.

Pavlick said farmers will stop supporting Trump if they lose their farms.

Also, easing tariffs on consumer goods will boost the broader economy. “That’s the one thing that has appeal to voters beyond Trump’s political base,” says Pavlick.

If you have any doubt that Trump is feeling pressure and that China has significant leverage, consider this: Trump wanted Chinese President Xi Jinping to sign phase one of the trade pact in Iowa in what would’ve amounted to a campaign event for Trump.

China and US haven’t settled on the location just yet but, as of now, it seems Xi will deny Trump an Iowa trip, based on our reporting. But, of course, things could change.

And yet, the US may be willing to concede more ground to China. Analysts are now watching for any hints that the administration may lift the “currency manipulator” designation it slapped on China in August.

That would be a huge win for the Chinese.

Trump is lucky that tariffs are hurting the Chinese economy, which continues to help the American negotiating position.

But if you want a sign of how much the US is willing to concede to deliver a political win for Trump, pay attention to where Xi and Trump agree to meet. Xi will likely demand a high price if it’s somewhere in the US. The Chinese President knows that will only reinforce the image Trump wants to portray as the President who takes China down.

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