Criticism for President Donald Trump on trade during the latest round of Democratic primary debates comes even as the White House seemed to be inching towards relieving some of the tensions with China — and it also reveals the challenges both parties will have balancing populist impulses with voters’ desire for a strong economy.
China said on Friday it would exclude American soybean and pork exports from additional tariffs. Earlier this week, Beijing said it would pull 16 American exports from the list of goods on which it planned to impose tariffs. Trump announced on Wednesday that he would delay by two weeks the imposition of an additional 5 percent tariff on $250 billion worth of Chinese goods that had been scheduled for Oct. 1.
“I think there might be less or delayed escalation. Both leaders have an interest in that right now,” said Jacob Kirkegaard, a senior fellow at the Peterson Institute for International Economics, citing the unrest in Hong Kong and the upcoming 70th anniversary of the People’s Republic of China along with worsening economic indicators in both countries.
Although this would suggest an easing of tensions in the short term, international trade experts say it also is a dynamic that narrows the window of opportunity for the White House to forge any kind of grand bargain.
“As the conflict has gone on over the course of the last year, I think people have gotten a lot more pessimistic,” said Chris Zaccarelli, chief investment officer at the Independent Advisor Alliance.
As hopes for a resolution that addresses key thorny topics like intellectual property protection fade, investors are just hoping for calm, he said. “At this point in the trade conflict, I think people feel like the best-case scenario is some kind of truce or a thawing in tensions, not a deal.”
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“If you’re Xi Jinping, I would say, ‘Why should I cut a deal with Trump?’” Kirkegaard said, suggesting that China might prefer to deal with a less volatile administration. “They’re predictable in a way that Trump is not, and I think that has a lot of value for the Chinese, and other countries.”
The president’s trade policy was blasted as “haphazard” by hopeful Democratic presidential candidates during Thursday night’s primary debate. Senator Amy Klobuchar, D-Minn., landed the sharpest dig of the night, accusing Trump of “treating our farmers and our workers like poker chips in one of his bankrupt casinos.”
“The big takeaway from the debates is that they didn’t try to mimic Trump on China. They’re realizing, as is the administration, that this trade war is beginning to hurt.”
The characterizations they used, though — and what they didn’t say — reveal an important distinction that could have ramifications for the U.S. economy not only in the near term, but also after the 2020 election, said Michael O. Moore, a professor of economics and international affairs at George Washington University.
“The complaints was about tactics — it wasn’t about the goal,” he said. “The goal seems to be to change the current global trading system and both sides want to take credit for that fundamental shift.”
Traditionally, labor-aligned Democrats have been the party more leery of globalization and free trade agreements, but most are loathe to openly champion a cause that has been a fixture of Trump’s presidency — and that is inflicting increasing economic harm.
“I actually think the big takeaway is that they didn’t try to mimic Trump on China,” Kirkegaard said. “I think it’s because they’re realizing, as is the administration, that this trade war is beginning to hurt. As these new rounds of tariffs come in, people are going to be paying more.”
There are signs that markets and voters alike are growing warier of the potential for damage — raising the stakes for both parties. Earlier this week, a CNN/SSRS poll found that just 48 percent of registered voters approve of Trump’s handling of the economy — a drop of eight percentage points since April, while the U.S.-China Business Council warned that more than a million jobs could be lost in a trade war.
The bipartisan spread of populism is changing the equation and reshuffling traditional alliances. “To a small extent, I think President Trump has broken that mold,” Zaccarelli said.
“There has been that nativist, economic nationalist impulse in the Republican party. It’s just been a fringe traditionally,” Moore said. “All those groups are now much more ascendant in both parties.”