The Trump administration’s trade policy with China has gradually come to be associated with the phrase “decoupling.” The emergence of the phrase, which is generally used to mean a simple pullback in trade between the two countries, shows how far the Trump administration has shifted the debate on trade.
Decoupling is not the stated goal of the administration, or of Beijing, but President Trump has said numerous times that he wouldn’t mind if it happened and, on one occasion, issued a tweet that appeared to directly order that. Such rhetoric, combined with the aggressive tariffs and retaliatory actions by both sides throughout the trade war, have made the prospect of decoupling seem real enough that it has become a topic of discussion among policy experts.
In early September, Stephen Myrow, managing partner of Beacon Policy Advisors, called it “the new buzzword in Washington discussions of Sino-U.S. negotiations,” defining the term as “the prospect of disentangling the U.S. and China entirely and creating two distinct economic systems.”
The word gradually crept into usage during the Trump administration. “I started using it informally in 2017 after the 301 was launched, and [I] wasn’t the first,” Derek Scissors, resident scholar at the American Enterprise Institute, said, referring to Section 301 of the Trade Act, the law the Trump administration has invoked to create the tariffs.
“I hadn’t heard of this term until I was on a China 301 call with other trade policy nerds this summer,” said Welles Orr, a former assistant U.S. trade representative during the Bush administration. He defines the term as “essentially delinking from our business-as-usual relationship with China.”
Douglas Irwin, a nonresident senior fellow at the Peterson Institute for International Economics, has written commentaries and op-eds on the subject. He’s not certain where he first heard it either but agrees its has become commonplace. “I probably first heard it from someone in the D.C. trade policy community, or an administration official,” he said.
Two decades ago, by comparison, the buzzword in trade was “globalization,” generally defined as the belief that the world and its economies had permanently and irreversibly shifted to accommodate international trade. “Globalization isn’t a choice. It’s a reality. There is just one global market today,” wrote Thomas Friedman in the 1999 treatise The Lexus and the Olive Tree: Understanding Globalization.
Trade between the U.S. and Chinese economies grew extensively in the subsequent two decades. In 1998, U.S. imports from China totaled $71 billion in goods, not adjusted for inflation, while the United States exported $14 billion back. Last year, imports from China totaled $540 billion and exports came to $120 billion. U.S. supply chains now commonly extend to China. It is unlikely that growth in trade can be completely reversed, but the Trump administration has challenged the notion that the relationship only moves in the direction of greater integration.
The term “decoupling” has become so commonplace it was used by Beijing to describe the Trump administration’s objectives. “Some individuals vow to decouple our economies — this is just their wishful thinking,” Chinese Foreign Minister Wang Yi said at a Communist Party event in March. “Decoupling from China would mean decoupling from opportunities, from the future, and, in a sense, even from the world.”
No Trump administration official appears to have used the term or variations on it. That’s because a complete cut-off is unlikely and not really wanted, Scissors said. “The president and [U.S. Trade Representative Robert] Lighthizer have never sought decoupling, so there’s no reason for the administration to use that term. The president wants more exports. The USTR wants better intellectual property protection by the Chinese,” he noted.
Trump administration officials have repeatedly suggested that the official policy could move in that direction, however, if China does not change its ways. The president said in a late August tweet, “Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA.”
White House officials said the president was not actually ordering U.S. businesses to cease trade with China, but contended that he could do precisely that under the 1977 International Emergency Economic Powers Act. “Ultimately we do have such authority, but it is not going to be exercised presently,” White House economic adviser Larry Kudlow told CNN.
Earlier in the month, Trump told reporters, “If they didn’t want to trade with us anymore that would be fine with me. It would save us a lot of money.”
