Someone needs to introduce Donald Trump to the phrase Pyrrhic Victory.
Trump claims victory in his government-paralyzing Wall tantrum. In truth, he gets no Wall and $3 billion less in congressional funding than he could have had a few months ago. That “victory” comes at a cost of many more billions in a month-long hamstrung economy and a significant decline in approval ratings, both for himself and his party.
So too did Trump claim victory in improving US-North Korean relations. His “victory:” Kim has increased his missile-building since the summit that put his tin-horn dictatorship on equal footing with the United States.
Now Trump is about to claim another victory with China, one that will earn him undeserved popularity and fuel his pompous pronouncements for months. The cost of this “victory” will be harder to define and the benefit nugatory. Or, as Bill Buckley retorted when a Brandeis student excoriated him for using the term with “haven’t you got another less esoteric term for nugatory?”
In other words, Trump is going to trumpet a meaningless “concession” from China.
I just returned from a grim China. It’s mired in a recession. Factories are closing, wages are stagnant and faces are glum. Privately, a populus once enamored of Xi Jinping as the common man set on cleaning up corruption now sees him as a repressive dictator-for-life with a growing anti-capitalist agenda reminiscent of the worst of Maoism. Some Chinese secretly enjoy Trump, for at least the Orange Menace can be open in his criticism of Xi.
The Chinese economic downturn has far less to do with Trump’s tariff war than Xi’s imposition of a 15 percent tax hike, the loss of international low-cost labor jobs, the end of the real estate and stock market speculation bubbles and the ongoing cost of a huge government cash infusion in the Chinese economy to ward off global recession a few years back. Toss in the controversial billions spent indenting China and Third World nations with The Belt Road infrastructure project in Central Asia and major construction support in totalitarian Africa, and you have a recipe for a devalued yuan.
What you also have is a China eager to make a deal with Trump — if it can save face in so doing. Fortunately, as the Chinese know well, they are negotiating directly with a blowhard idiot. Witness Trump touting his new NAFTA though it actually changed very little in trade relations between the U.S., Canada and Mexico.
So, the Chinese know that the least sop they offer Trump will be sufficient to end tariffs unpopular at home. Then we will all have to endure Trump’s pronouncements that he has won concessions no president could previously wrangle from China.
In truth, the tariff was designed to create the least noticeable pain to American consumers. China was able to find alternative sources to now-overpriced American goods.
But there is truth to many of Trump’s whines about how America is taken advantage of by China. The country has long benefitted from an unequal trade relationship with the U.S. They impose duties on our goods unmatched by us. They steal intellectual property with impunity.
Trump will not fix all that. So does redressing the Chinese trade imbalance matter to our economic health? Not much. It was only in recent years that Chinese consumers had a cumulative spending power – not per capita – approaching America. So we can’t have expected their imports to match all that American companies profited by outsourcing labor to cheap Chinese labor.
American consumers benefit from that imbalance just as international corporations do, from the low price of China’s dirt-cheap labor and pirated technology.
China and the U.S. are symbiotes. We built the Chinese economy to benefit ourselves. In return for cheap and plentiful goods, we handed them the keys to their prosperity and our own future — they own the lion’s share of our debt. In turn, China is fumbling at becoming a self-supporting economy. They need our money to fuel their growth.
We have little to gain by hindering the Chinese economy, and little leverage to apply, without dire consequence, on their financial status.
Unlike Trump, Xi can play the long game, making only token concessions. The trade imbalance will remain. American farmers will have a hard time regaining lost business from their biggest client. Companies relying on Chinese parts have already gone out of business.
King Pyrrhus lives on in the buffoon who would be king. Would that we were the Romans, not the “winners” in Trump’s Epirus.