A president flip-flopping on a promise to crack down on China’s trade practices is not new. But what President Trump did was.
What was different about Trump’s about-face last week on labeling China a currency manipulator was how directly he acknowledged that he was subordinating trade concerns to foreign policy considerations.
“From one perspective, you could look at that as candor,” said Scott Paul, president of the Alliance for American Manufacturing. “It’s certainly a flip-flop. But it’s striking in the scope of the reversal.”
Trump stated his reasoning most candidly Saturday, when he tweeted that he wasn’t going to name China a currency manipulator because “they are working with us on the North Korean problem.”
During the presidential campaign, Trump had repeatedly called for naming China a currency manipulator, on Twitter, in op-eds and in speeches. Requiring the Treasury to designate a country a currency manipulator would set a process in motion that could, over time, result in penalties for China that certainly would raise the threat of retaliation.
Past presidents have engaged in similar rhetoric on the campaign trail, before reversing themselves once in office. President Bill Clinton, for example, railed against the “butchers of Beijing” in 1992, but by the end of his term had helped China en route to joining the World Trade Organization.
But what was distinctive about Trump was that he explicitly said that concerns about foreign policy would not overrule economic considerations when it came to China.
Speaking on Breitbart News Daily in January, Trump’s head of the newly formed National Trade Council, China critic Peter Navarro, criticized past administrations for being willing to “sacrifice our factories and our workers on the altar of foreign policy.”
“There continues to be a line of thinking in government, in the defense establishment and foreign policy wonks, that somehow if we give China something on the economy, they’re going to give us something on North Korea. It’s a fool’s game,” said Navarro, Trump’s campaign economic adviser and the author of several books critical of China’s trade practices, such as the 2011 volume Death by China.
Of course, diplomatic considerations have always shaped trade arrangements, including the decision on whether to name a country a currency manipulator.
But recent administrations have pointed to technical calculations or unspecific factors in quietly declining to label China a manipulator, rather than admitting the role that non-economic factors play in those decisions.
Trump did not take that route. Instead, he explicitly told the public that he was dropping his pledge for diplomatic reasons.
“It was a little bit striking to me when the president appeared to do a complete 180 on that and … expressly said that we was using the currency report as a tool in international diplomacy,” said Paul, whose coalition comprises manufacturers and the United Steelworkers union. “That baffled me.”
Although stated with unusual candor, Trump’s position brings him now into alignment with the foreign policy establishment.
Speaking Monday on Fox Business, former diplomat Paul Bremer said that successful negotiations with China over North Korea are a more pressing consideration that trade concerns. “Coming to an agreement with the Chinese about that is a much bigger, much more important problem than whether we call them a currency manipulator or what our trade balance is,” he said.
