The ‘Fundamental Mistake' in Trump's Trade War With China

Yahoo

2 days ago

As President Donald Trump tries to ease tensions with Chinese President Xi Jinping, don't expect a quick trade deal after a phone call between the two leaders.
That's just not how the Chinese government works, according to Nicholas Burns, who recently wrapped up a three-year tour of duty as U.S. ambassador to China under the Biden administration.
'I think it'll be months of negotiations,' Burns said in an interview with POLITICO Magazine.
Burns' tenure put him on the front lines of a geopolitical relationship roiled by recriminations over China's alleged role in the origins of Covid-19, the Chinese spy balloon incident and escalating tensions over trade and the fate of Taiwan. A possible reflection of those tensions: Xi made Burns wait more than a year before accepting his credentials.
Burns' diplomatic career began in 1980 as an intern at the U.S. embassy in Mauritania and included time as U.S. ambassador to NATO and service under presidents of both parties. He madehis first trip to China in 1988 accompanying then-Secretary of State George Schultz. At that time, China had an annualgross domestic product of $312 billion, the Chinese government had begun experimenting withvillage-level democratic elections and Xi Jinping was toiling away as theexecutive vice-mayor of the city of Xiamen in Fujian province. Thirty-six years later, the value of China's GDP hadhit $19 trillion and Xi had become China's unchallenged paramount leader at the top of an increasingly repressive authoritarian government.
In the interview, Burns noted it's important to counter Beijing's increasingly aggressive economic, diplomatic and military global footprint — but warned that Trump is going about it all wrong, particularly by using tariffs as a cudgel against longtime partners who otherwise might have allied with the U.S. against China.
'That was a big mistake that I think the administration is now trying to atone for,' he said.
This conversation has been edited for length and clarity.
What keeps you up at night in terms of what could go wrong with the U.S.-China relationship?
The fact that we've had trouble convincing the Chinese it's in our interest to have our senior military leaders talking. My nightmare scenario as ambassador was not an intentional conflict, but an accident.
Our two navies are operating in close proximity around the Spratly, Paracel, Senkaku Islands and the Taiwan Strait, so in the event of an accident or collision in the air or on the sea, you want to be able to have senior level military officers intervene on both sides to lower the temperature and separate parties. For a long time during my ambassadorship, the People's Liberation Army refused to have that level of contact. I worry very much about that. There was such an accident in 2001 that George Bush and Colin Powell had to deal with that and it was a very worrisome situation. We don't want that situation to lead to a bigger conflict over a misunderstanding.
I also worry about connectivity. After Speaker Pelosi visited Taiwan in August 2022, the Chinese effectively shut down diplomatic contacts between our governments at a senior level. They did it again after that strange balloon drifted across the territory of the United States in 2023. So there were moments when I felt that it was in doubt that we could actually handle a crisis. And given the competitive, really palpable competition between two countries, we have to be able to manage conflict and to reduce the probability of a major conflict.
How would you characterize the state of the U.S.-China relationship from where you left Beijing in January to four-plus months later under the Trump administration?
There are a lot of similarities. I'm not privy to everything going on now, because I'm not there, but I don't think the situation right now is dissimilar. We had many issues where we were at loggerheads the day I left, and that's certainly true of President Trump right now. I have a certain amount of sympathy for what the Trump administration is dealing with, because on the one hand, China is our strongest adversary in the world. On the other hand, there are certain issues where we have to work with China.
One of the most difficult things that I found day-to-day was how do you balance a situation where our strongest competitor is in some areas — like climate change or fentanyl — a partner we have to work with, and you have to be able to balance the two.
I spent about 80 percent of my time on the competitive edge with China and about 20 percent on the cooperative side. There are days when you had to work with cooperative issues, and many other days when you had to accentuate the competitive ones. I think that's what the Trump administration is finding.
A key component of the Biden administration's China strategy was a focus on bolstering ties with allies and partners to counter Beijing's growing global footprint. Trump's approach to China — and the rest of the world — hinges on tariffs and trade. How effective is that?
It was not a good start. I think the fundamental mistake that was made was that when we imposed tariffs on China, we also imposed high tariffs on South Korea, Japan, the European Union, Canada and Mexico. All those countries are on our side in the big issues that separate us from China. All of them have the same economic issues and trade problems with China. If we had highlighted China as the major disruptor of global trade, which China has been for the last couple of decades, and formed a coalition with the EU and Japan and the U.S. — that's 60 percent of global GDP — we would have had leverage for these negotiations.
But when we simultaneously advanced really high tariffs in those countries, we took them away from our side of the table. And if you look at the comments of Treasury Secretary Scott Bessent, they want to have those countries supporting us. They took away our natural allies in a tariff fight with China. That was a big mistake that I think the administration is now trying to atone for, but it would have been a lot easier if we had just focused on China on April 2, not every country in the world in terms of reciprocal tariffs. As we encounter China in the Taiwan Strait, in the military competition in the Indo-Pacific, on trade issues, on China's support for Russia against Ukraine, it's essential that we have Japan, South Korea, the European Union, NATO countries, Australia and India on our side. We can outweigh the Chinese, and we can deter the Chinese when we have that allied coalition mentality.
Beijing argues that the Trump administration has picked an unfair fight with China over trade. Is that fair?
Let me say something more understanding of President Trump's dilemma. The Chinese have been saying every day for the last several weeks that the United States is being unfair, that we're a bully, that we're disrupting global trade. In fact, they're the biggest problem in global trade. Intellectual property theft against American and other nations' companies; forced technology transfer; dumping of EVs, lithium batteries, solar panels on the rest of the world below the cost of production; disrupting global markets; trying to kill the manufacturing industries in places like the United States and Europe.
So I always start from the presumption that tariffs are necessary with China. The question is, what level of tariffs? Remember that President Biden put 100 percent tariffs on Chinese EVs, 50 percent tariffs on semiconductors and 25 percent tariffs on lithium batteries. I think 145 percent [tariffs on Chinese imports] was a mistake. Putting tariffs against our allies — mistake. But I do understand the necessity of the United States to have a hard enough strategy when it comes to China.
The Trump administration appears convinced that it can bend Beijing to its will through this imposition of tariffs and threats of higher tariffs based on a belief that Beijing has more to lose than the U.S. in this trade war. How realistic is that?
I don't think it's a realistic understanding of Chinese government attitudes. The Chinese leadership considers itself to be a peer in power — economic, technological, military — of the United States.
Because the Chinese Communist Party puts the president of China, Xi Jinping, on an absolute pedestal, there was no way going into this that they were going to allow Xi Jinping to be humiliated or to be browbeaten or to come out as a loser in a trade duel with the United States. It was entirely predictable that if we put 145 percent tariffs on China, they were going to essentially match us, which they essentially did at 125 percent.
So in a tariff war like this, there will be no clear winners. But if there is a deal — and I think there will eventually be a trade deal, because self-interest and logic will dictate that — it's going to have to be a deal where both sides get something. And China's at a point where it's no longer a country that has an inferiority complex against the United States, which I think in the past, it did. It thinks of itself as a peer. They're determined that they aren't going to come out as the loser in this.
The White House has insisted that Trump and Xi will get on the phone and break the logjam in the tariff talks deal brokered in Geneva last month by Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng. How likely is that given your knowledge of how the CCP senior leadership operates?
The way the Chinese work is that if our president talks to Xi Jinping, they will agree to general principles. Such as 'Let's try to resolve the tariff war. And let's get Vice Premier He Lifeng to sit down again with Treasury Secretary Scott Bessent.'
In my experience, Xi Jinping has never sat down with a foreign leader, especially ours, and tried to negotiate one-to-one in a detailed way the differences between us. [Chinese leaders] want to delegate that to the ministers or the ambassadors, and then when they've come back with some kind of solution, then they have to decide, Xi Jinping and our President, do we support it? Do we agree? I don't think you're going to get an agreement on the phone, but that doesn't mean that President Trump shouldn't have that conversation. I think he should.
I think President Trump's right that the relationship between the two of them is really important. Because China is now a one-man-rule government. You have to go to Xi Jinping. I just don't think you're going to resolve it on a phone call. But maybe what they could do in the phone call is to say, 'Okay, we seem to be at loggerheads. We're making no progress. Let's have our negotiators go back to Geneva. Let's give them instructions to try to resolve this.' And I think it'll be months of negotiations. I wouldn't be surprised if this 90-day diminution of tariffs on both sides has to be extended into the autumn, but I think there will be a trade deal because both countries want it.
What is the longer-term outlook for the U.S.-China relationship?
China is looking for stability in its relationship with the United States. Its economy is not in a catastrophic state, but it's not performing well. They're worried about their low GDP growth rate. They're worried about a 32-point reduction in foreign direct investment into China last year. They're worried about foreign corporations that have invested and traded with China hedging their bets now, because of the poor state of the relationship between our two governments, and because of the poor governance of the Chinese state itself. I think what they want is to maintain their market share in the United States, and they want to maintain their manufacturing export possibilities with us. I don't think it's going to change much depending on who's in the White House, Republican or Democrat, in the next 10 years.
We're the two largest economies, with the two strongest militaries. We're the only two countries with really true global reach but with entirely different philosophies about human freedom and human rights and direct competitors when it comes to artificial intelligence, quantum computing, biotechnology, cyber and space.
We're locked into a rivalry that's structural. What we tried to do in our administration was to acknowledge that reality and to obviously compete so that the United States could win as many of these arguments as possible and position ourselves strategically, economically, militarily to benefit ourselves. And at the same time, have an ability to work with them so that we could drive down the probability of a conflict because we concluded that we needed to live in peace with China. The idea of a war would be a catastrophe.
What do you see as the most critical U.S. misunderstanding about China?
There's been a conventional wisdom in the United States, in both political parties, that China does not have the capacity to innovate. That China just imitates and steals intellectual property and designs for commercial products from the United States. Those days are over.
I think what the American people need to understand — our government and both parties — is that China is a worthy competitor. Their science and technology talent is prodigious. The level of scholarship, of patents, of research in some areas exceeds us, or is equal to us. In some critical areas of technology transformation, they are putting massive amounts of state-directed money into their national champions like Huawei, with companies that they want to succeed in the world. They're doing it on a consistent basis, and they plan over decades, so they have that advantage.
When I was leaving in January, the Chinese announced $15 billion of state money going into quantum computing alone. They want to beat us to the punch there. That's something that's not as well understood in American society and even in our press — people have older, conventional views of China that are outdated.
The Trump administration has dismantled some of the key tools of U.S. soft power aimed to counter China's growing global influence — USAID, Radio Free Asia, Radio Free Europe and Voice of America. Is that a problem?
The destruction of USAID was a catastrophic mistake for the United States. That was our agency that said to the rest of the world, 'We'll help you on vaccines. We'll help you with HIV. Will help you with polio.' Elon Musk and company destroyed USAID in one week and laid off 8,500 people. That helped China.
The Chinese then went out with a massive propaganda blitz the next day all over the world saying, 'The United States is not interested in you any longer.' I watched the Chinese do this in February and March. The way the cuts were done, the fact that it was done with so little thought, so little information, and so little respect for our career civil servants was disgraceful.
As ambassador, you fought hard to restore what you referred to as 'people-to-people' ties between the U.S. and China. Last week, the Trump administration announced that it would 'aggressively revoke' the visas of Chinese students in the U.S. and tighten scrutiny of Chinese citizens seeking to study in 'critical fields' in the U.S. How strategic is that move?
We have a competitive, difficult, contentious relationship with the government of China. That doesn't mean we should have a competitive, contentious and difficult relationship with the people of China. In fact, as we compete with the government of China over the next decade or more, we should keep the doors open to tourism, to business travelers and to Chinese students in the U.S. and American students in China. Because you don't want to drive this relationship into a wall where Chinese people don't speak English, and they've never been to Missouri or Montana. And you certainly want younger Americans of high school and college age to learn Mandarin, so that as they become our leaders in the next couple of decades, they have a real good sense of the other big superpower.
For the most part, Chinese students in the United States at the undergrad and grad level are observing our laws, and they're getting a taste of what a democratic society looks like, what true democracy is and they're learning how to think independently.
I don't know what Secretary Rubio meant when he said we're going to aggressively revoke the visas of Chinese students. Are they going to revoke the visas of every member of the Communist Party? There are 99 million members of the Communist Party. Are we going to keep everybody out? I have enough confidence in our democracy that the Chinese will come here and be impressed by our country. And that many of them will want to stay and work for Google and Amazon and ChatGPT, and they'll make our country stronger, and some of them will go on to found tech companies that will employ Americans.
I think it would be a major mistake to close the doors. Yes, we have to screen out the bad actors, but we're doing that, and that would be the difference I have with the Trump administration on this issue of Chinese students.