How China’s rise is helping to unite America behind Donald Trump’s trade war

Beijing’s decision to substantially revise a draft trade agreement and the veiled threat on supplies of rare earth metals have provoked Americans who believe Washington is making a fair request for market access and an end to tech theft

Robert Boxwell

Published: 3:00am, 28 May 2019

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“Yo, good game, man. You were the best player on our team.” This is a common post-game taunt in American sports when one is shaking hands with an opponent. American football players sometimes don’t get it, which adds to its zing.

The next time US President Donald Trump meets his trade war opponent and Chinese counterpart Xi Jinping, he could try the line. In their “whose tariffs are bigger” contest, Xi’s actions over the past few weeks have helped Trump a lot.

Xi and his team are helping unite a divided America, where left and right are otherwise fighting tooth and nail over a host of domestic issues ranging from “the wall” to abortion.

These aren’t overarching, unifying issues to Americans like democracy and human rights are though, and Americans seem to be preparing to endure some economic pain to defend these principles, which they believe are the foundations of the US.

Some of Trump’s fiercest opponents have come out in the past few weeks backing him on the trade war, usually with some version of “I don’t like the guy, but I’m with him on this one”.

The generally anti-Trump New York Times has run a number of articles about Beijing’s surveillance and actions in Xinjiang, mentioning Huawei’s involvement, which gives cover to many who would otherwise oppose anything Trump does.

Trade negotiations were seemingly inching towards closure last month, when Beijing sent back a 150-page draft agreement the two sides had been working on, with entire sections or agreed points deleted or revised. It has been reported that the changes to the agreement were either demanded by Xi or pushed for by his colleagues.

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Whatever their origin, the changes caused US Trade Representative Robert Lighthizer to use a word not often heard in international diplomacy, accusing Beijing of “reneging” on points already agreed.

Even Treasury Secretary Steven Mnuchin, an ex-Wall Street investment banker who is the friendly guy on the US side of the table, spoke out against Chinese tactics.

In the elite circles of Lighthizer’s and Mnuchin’s private-sector careers, professionals usually terminate negotiations when the other side tries to “re-trade” on points already agreed.

In response, Trump ordered Lighthizer to increase to 25 per cent the existing 10 per cent tariffs on US$200 billion of Chinese goods imported annually to the US and to prepare tariffs for the remaining US$300 billion of Chinese imports. If there had been any progress towards a deal, it has stopped dead in its tracks.

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Then the US Commerce Department announced that it had added Huawei to its entity list, which could effectively stop US companies from selling to the Chinese telecoms giant, a serious blow to Huawei’s business unless it can undertake the difficult task of replacing advanced chips from the US.

In response, Xi gave Trump another boost, when he visited a Chinese rare earth processing plant in Jiangxi last week. China supplies the vast majority of processed rare earth metals needed to manufacture many electronic and military products.

Xi’s visit followed an editorial in the state-run Global Times, headlined: “US need for rare earths an ace in Beijing’s hand”, which clarified the implication: disrupt Huawei’s supply chain and we’ll disrupt much more of yours.

To Americans who believe that US negotiators are simply asking China for market access and an end to the theft of US tech, and that Huawei is a separate issue, the implied threat – to weaponise rare earths and hurt the US economy broadly – was inappropriate and provocative.

And news that US businesses in China believe they are being hurt by customs and other officials in retaliation for the trade war also helps Trump garner support at home. Americans find it hard to conclude that these things aren’t happening without tacit approval from Beijing.

This phenomenon of local hostility has always been one of the reasons why concluding any agreement with Beijing seems unlikely to change much on the ground for US companies.

Beijing’s propaganda machine feeds China’s citizens a diet of anti-US invective and tales of victimhood at the hands of Westerners. So, it doesn’t take much for many Chinese to vent a little anger on a foreign brand or villain of the day in a show of their patriotic bona fides.

Huawei ban: why China shouldn’t retaliate against US firms

Taken together, these recent events show a China not interested in acceding to what Americans believe are simple, fair requests for market access and protection of US intellectual property. The latter has become a sine qua non of any trade deal for US political and business leaders of all stripes. And they don’t want Trump to back down on the issue.

All societies evolve and China, under the Communist Party, will change. But Chinese businesspeople won’t make changes that hit them in the wallet unless Beijing actively forces them to.

And little about the Communist Party under Xi indicates that Beijing is in any mood to take orders from a US president who is regularly ridiculed in the state-controlled media.

So, Trump should thank Xi for helping him win Americans over to his side. He has been consistent about forcing Beijing to change China’s trading practices, but because he is Donald Trump, few of his political opponents would say early on that they were with him. They are saying it now.

Robert Boxwell is director of the consultancy Opera Advisors

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