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President Trump is gaining the advantage over China in his long-term trade strategy, proving the naysayers wrong with his decision to use tariffs as leverage.
When Donald Trump first introduced his aggressive trade policy and imposed targeted counter-tariffs to push back against China’s rampant trade manipulation, most of the so-called experts remained skeptical.
President Trump’s strategy was deemed too dangerous by commentators, who also predicted that it would be powerless to contain China’s economic aspirations. The president never wavered, though—and his commitment has paid off faster than anyone could have predicted.
Beijing last month announced it would cut tariffs on imported U.S. cars—a major concession in a trade war that increasingly is tipping in Washington’s favor. The decision to slash tariffs on American-made cars from 40 percent to 15 percent came the week after President Trump met face-to-face with President Xi Jinping in Argentina and announced that both countries are on the verge of a breakthrough on trade.
Of course, China’s sudden concession has a direct cause—President Trump repeatedly has pressured Beijing to adopt a fair trade policy toward the United States, knowing that China has a lot more to lose in a direct trade war than America does.
“We are either going to have a REAL DEAL with China, or no deal at all—at which point we will be charging major Tariffs against Chinese product being shipped into the United States,” the President tweeted recently. “Ultimately, I believe, we will be making a deal—either now or into the future. China does not want Tariffs!”
Trump was right: Beijing doesn’t have the fortitude or economic resilience to weather additional U.S. tariffs on its goods. After all, China’s economy relies heavily on exports, making it particularly vulnerable to policies that restrict its access to the world’s largest consumer market.
The president also understood that China’s economic might has rarely been tested, and accurately predicted that Beijing would be unwilling to risk its long-term growth prospects by engaging in a trade war against a far more stable market economy.
Despite hysterical warnings from Democrats, President Trump’s strategy began showing signs of success way back in early August, when China’s leaders reportedly became unsettled over U.S. tariffs—a clear sign that decision-makers in Beijing had no confidence in the resilience of their economy.
As it turns out, their concerns were well-founded.
According to a recent New York Times business report, China’s economy has experienced a major slowdown in both retail spending and industrial production in recent months, putting Xi Jinping and his party under significant political pressure.
China is suffering from declining business and consumer confidence, car sales have plunged, the housing market is stumbling, and some factories are reportedly letting workers off for the Lunar New Year holiday two months early.
As a result of those domestic economic pressures, the Times notes that Xi “has been forced to make concessions to the United States as President Trump’s trade war intensifies.”
Fact is, Trump is gaining on China—and a triumph on his trade strategy is approaching faster than anyone anticipated. While Beijing’s inability to go toe-to-toe with Washington on trade is partially a symptom of its own economic weakness, President Trump deserves the credit for identifying that weakness, pushing China to its limit, and calling the Communists’ bluff.
Photo Credit: STR/AFP/Getty Images