President Trump and his underlings seem to have come around to the fact that the United States is not likely to get a trade agreement with China this year or next.
Trump has been saying, disingenuously, that the U.S. doesn’t need a trade agreement with China.
“We don’t need China and frankly would be better off without them,” he tweeted on Aug. 23. Sour grapes.
His chief economic advisor, Larry Kudlow, said recently that the two countries might come to terms on a trade deal someday, but it might not happen while Trump is president.
“I don’t want to make a prediction, but the stakes are so high we have to get it right,” he said to reporters at the White House. “And if that takes a decade ... so be it.”
That statement is as sensible as it is pessimistic.
Negotiators from the two countries are scheduled to meet in Washington in October. Their negotiations to date have yielded next to nothing in terms of substantive progress. Even if they make significant headway during this go-round, they’ll still be a long way from signing a comprehensive agreement.
Then there’s Congress. If, by some odd chance, the Americans and the Chinese were to reach a final, signed agreement, the Democratic-controlled House wouldn’t just accept it as a done deal and vote to ratify it. Just look at the state of play with the U.S.-Canada-Mexico Agreement, which is simply a marginal revision of NAFTA. House Democrats refuse to touch it until its enforcement chapters are strengthened. That isn’t likely to happen.
With China, Trump has made a huge error in judgment. He thought he could torture them with tariffs and they would give in. They haven’t and they won’t. President Xi Jinping told the Chinese people to hunker down for a long campaign, and there is little that would delight the Chinese people more than humiliating the United States.
Trump has said the tariffs and China’s retaliatory tariffs haven’t had an appreciable effect on the U.S. economy. That may be true in terms of GDP, but businesses that rely on imports of intermediate parts and accessories from China are suffering. Manufacturing employment growth slowed substantially in August, according to the Bureau of Labor Statistics.
“The industry has added an average of 6,000 jobs per month so far in 2019, after adding an average 22,000 per month in 2018,” a BLS report released Sept. 6 said. It was the first decline in manufacturing job growth in three years.
Perhaps more telling is that the unemployment rate among factory workers rose from 2.3% in May to 3.2% in August, according to the BLS.
Trump plans to fire another tariff barrage on Dec. 15. These will cover every Chinese import that isn’t already subject to tariffs, including Apple iPhones, toys, clothing, footwear, furniture and other consumer goods.
A Washington Post-ABC News poll released Tuesday found that 60% of Americans were “concerned” that the trade war with China will raise the prices of things they buy, and that the same percentage thought a recession was coming within a year. Forty-three percent of respondents said they thought Trump’s trade and economic policies increased the likelihood of a recession, as opposed to 16% who thought the opposite.
The warning signs of impending economic gloom are manifest. If a recession starts in the next year, Trump will blame Democrats, the press, Fed Chairman Jerome Powell and no doubt others. But American voters will blame him and send him packing. Maybe his successor will be able to do what Trump has proved too inept to do: cut a trade agreement with China.