Trump expects China to play by the rules on trade

The president’s critics have seized on the resolute words of administration officials like U.S. Trade Representative Robert Lighthizer to paint the cease-fire as nothing more than a temporary delay in the inevitable escalation of a trade war that will leave the U.S. economy in ruins. But his critics fail to appreciate the progress this administration has made. While his predecessors weren’t able to get China to the table, Trump’s tough talk and robust actions have brought Beijing to negotiations and won significant concessions.

Concessions from the Chinese on the thorny issues of subsidies, importation, dumping, and intellectual property protections seemed like a fantasy until now. Lighthizer and other administration officials are cautious in their comments, but the fact that negotiations are happening at all is an improvement over previous administrations.

Trade negotiations are far from over, and there’s already evidence that China may be acting in bad faith on intellectual property rights and other issues. But that doesn’t mean the U.S. trade delegation should pull up stakes and end the talks. Trump can always slap sanctions on China down the road if he feels like they aren’t playing ball.

Trump understands the importance of keeping China at the negotiating table. As long as both sides are talking, a long-term trade deal that serves America’s interest is possible. Trump sees tariffs for what they are: a bargaining chip. He doesn’t expect to have to pull the implementation trigger entirely, but he knows he stands a better chance of making a good deal if he has a list of tariffs in his pocket.

The president’s critics should be patient instead of overreacting to his every social media post. There are reasons to be concerned about the effect of Trump’s tough negotiating tactics in the near term — costs for products many American companies depend on, mine included, have increased — but the hysterics on the left weakens their credibility and overlooks the fact that the president is right about the need to balance the ledger with China.

In the meantime, there is one element Trump should add to the current negotiations. If he wants to erase the trade deficit and increase leverage over the Chinese, he should focus on China’s need for oil.

China needs a steadily increasing supply of oil to keep up with the rising standard of living of its citizenry. Chinese demand for oil has slowed in recent months, but this is a blip on the long-term forecast and caused primarily by the current trade fight with the United States. A prolonged downturn in Chinese demand for oil would signal something more serious: a global economic slowdown.

There’s an easy enough solution to China’s appetite for oil. The United States is flush with oil and about to become more so once pipeline issues in the prolific Permian Basin are worked out and planned export terminals along the Gulf Coast are completed. Producers are already eager to find overseas markets.

The U.S. recently became a net exporter of oil for the first time in almost 75 years. Trump should seize this opportunity to build closer relations with Beijing, while also supporting his goal of U.S. energy dominance. Not only could greater U.S. oil sales to China erase the trade deficit and shore up the U.S. dollar, but they could also ease tensions in the South China Sea and reduce the potential for regional conflict. Increasing the energy trade with China would bring our two countries closer while undercutting the influence of Iran and Russia.

Trump succeeded in getting China to the negotiating table. He should further use this opportunity to bolster America’s energy sector to increase access to the world’s fastest-growing market. Free trade only works when both sides play fair, and Trump is working to make it happen.

Dan K. Eberhart is CEO of Canary, one of the largest independent oilfield services company in the United States.