Editorial

Concern over Possible Division within the Administration over China Trade

09/19/2018

It is evident that the initiative of Treasury Secretary Steven Mnuchin supported by U. S. financial and business leaders to reach an accord with China over trade issues is impeded by implacable opposition by elements in the Administration favoring escalation in tariffs.

The President has proposed placing tariffs on an addition $200 billion in Chinese products exported to the U.S. with anticipated retaliatory action by China. Unilateral imposition of tariffs on exports to the U.S. will clearly serve as a barrier to continued negotiations

A White House spokesperson noted “The President has been clear that he and his Administration will continue to take action to address China’s unfair trade practices. We encourage China to address the longstanding concerns raised by the United States.”

The Administration is apparently unaware of the concept of “face” which is an important determinant in decisions and action in China. To make concessions in an environment characterized by threats might be acceptable in the West, but is antithetical to leaders of the world’s second largest economy. This is expressed in a statement, “China is not going to negotiate with a gun pointed to its head.”

In better times...

China has yet to indicate that it will retreat from stated positions on government support of quasi-independent business entities, protection of intellectual property and deviation from an asserted economic and political long-term plan. The nation has a considerable number of arrows in its quiver such as not purchasing U.S. treasury notes which fund our deficit in addition to retaliatory tariffs on our agricultural exports.

Attempting to isolate China by establishing bilateral trade pacts with Europe and Japan would not be as effective as direct negotiations and long-term resolution of issues applying mutual compromise.

In the balance of opinions, it appears that Dr. Peter Navarro, an avowed opponent of China holds sway in the White House negating the efforts of Treasury Secretary Mnuchin supported by U.S. commercial, manufacturing and financial interests. It is hoped that moderation and compromise will prevail given the financial plight of farmers and that fact that tariffs are effectively an indirect tax on consumers.

 

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Dr. Simon M. Shane
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