The Trump administration’s fake China trade policy

Did you notice the deadline for protecting Americans from TikTok passed again? Sorry, the deadlines passed. They join multiple fake Huawei deadlines, fake implementation of export controls, fake phase 1 export quotas, fake supply chain shifts . . . I’m probably missing some. As the clock ticks down on the Trump administration, its awful talk-to-action ratio on China only has a few more weeks to get worse.

There are legitimate concerns about data gathering by TikTok, combined with Chinese companies having no choice but transfer data if the central government asks. The Trump administration issued its first executive order (EO) on this August 6. There has since been another EO, regulatory review, threats of an operational bans, demands for American ownership, and public corporate intrigue. Still waiting for anything to happen.

An exceptional case? The Trump administration’s Department of Justice has accused Huawei of serious crimes, refiling with an additional charge. While the company was being charged and after it was added to the Entity List restricting exports, it received five temporary general licenses to buy US products undisturbed. When the general licenses stopped, it received multiple licenses to keep buying from its biggest American suppliers.

The TikTok and Huawei cases arguably should have been settled by legislation that overwhelmingly passed Congress in summer 2018. On Huawei, the legislation included export control reform, which the Department of Commerce has stalled. The legislation also increased protection of US data against foreign firms like TikTok. The multi-year legislative process required has been made somewhat pointless by Trump administration futility.

Chinese Vice Premier Liu He applauds U.S. President Donald Trump as he speaks at the start of a signing ceremony for “phase one” of the U.S.-China trade agreement in the East Room of the White House in Washington, U.S., January 15, 2020. REUTERS/Kevin Lamarque

If President Trump read this, he might tweet that export controls, TikTok, and so on are all much less important than his tariffs and phase one trade deal. In 2016, the trade deficit with China that candidate Trump railed against was $310 billion, $347 billion in goods alone. In 2019, those figures were $308 billion and $344 billion. They did fall sharply in Q1 but that was due to COVID-19. Otherwise, there’s basically no change.

Did tariffs encourage Beijing to sign phase 1? Almost certainly. But China is behind all phase 1 import pledges, even while claiming its overall imports are off only two percent from 2019 and its exports are now rising. The original justification for tariffs — the PRC’s intellectual property theft and coercion — has not been addressed by the Trump administration beyond vague claims of legal improvement, as if Chinese law is meaningful.

Supply chains seem important, especially in light of COVID. The administration has threatened to hold China accountable for the pandemic. Its main COVID supplies EO just shifts chains to protect against Chinese embargoes, it doesn’t retaliate for their disinformation. So far it appears to have generated a list, which is still in process. A May 2019 EO on technology supply chains remains unimplemented, but will be really soon. 

When President Trump says no one has done more on China, in an important way he’s right. American money heading to China has set records. The Department of the Treasury says it’s risen 150 percent to $266 billion on his watch. Treasury also says investment in the Caymans has risen 70 percent to $2.2 trillion. If you try to calculate the true level of US investment in China, direct and indirect, you get nearly $1 trillion, mostly under Trump.

While these failures affect national security, the national security community — State, Defense, NSC — is not implicated in them. And there are people in the economic and trade community trying to do the right thing. But, as the president knows as well as anyone, what matters is the bottom line. And the bottom line is loud talk falling far short over and over again.

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