Trump’s China Push Gets Caught Between Two Rival Chucks


(Bloomberg) -- Donald Trump is discovering how hard delivering on his promise to rewrite the economic relationship with China is. As the president prepares for high-stakes negotiations over the next few days, much of the challenge has to do with how the president balances the two Chucks in his life.

On one presidential shoulder sits Chuck Grassley, the Iowa Republican who chairs the Senate Finance Committee and is a vocal critic of Trump’s tariffs and the economic damage suffered by American farmers and businesses. He embodies what remains of the Republican party’s pro-trade establishment and the businesses from Main Street to Wall Street who want an end to the uncertainty brought by the president’s trade wars.

On the other sits Chuck Schumer, the New York Democrat and longtime China hawk, who as Senate minority leader has been a persistent reminder of the political risks Trump faces as he pursues both a deal with Beijing and his re-election. Schumer stands for the hawks in both parties who will pounce on Trump if he does a weak deal and a national security establishment that views China as an increasingly belligerent existential rival.

“We have to be strong with them. Any time they detect weakness, they take advantage,” Schumer told reporters this week.

In a pair of tweets this week, Trump made clear that the domestic political angle was top of mind as officials prepared for the latest round of negotiations, attributing China’s recent backsliding in talks to their “sincere HOPE that they will be able to ‘negotiate’ with Joe Biden or one of the very weak Democrats.”

Underlying that tweet was what current and former administration officials say is the president’s concern that any deal he cuts with China will end up becoming a political liability.

That is based in part on past experience. An initial pause in the trade wars negotiated by Treasury Secretary Steven Mnuchin last year drew a revolt from hawks like Schumer and Republican Marco Rubio and a u-turn by the administration within days that led to the ramping up of tariffs on Chinese imports.

What has changed since then is the consequences of the trade wars have become all too real for vulnerable constituencies such as soybean farmers and businesses.

Trump’s China Push Gets Caught Between Two Rival Chucks

Trump’s latest tariff threats caused some grain indices to hit 42-year lows this week just as farmers are hoping for a recovery in prices. It also prompted the CEO of Polaris, the snowmobile maker, to threaten to move jobs to Mexico if the new tariffs on Chinese imports including key components he relies on are increased.

That has widened the gap between the constituencies represented by Trump’s two Chucks to the point where it looks increasingly difficult to balance their interests.

Even as Schumer has cheered on the president, Grassley and some other pro-trade Republicans in Congress have grown increasingly grumpy about the president’s broader trade agenda. Grassley has threatened to block the ratification of a new Nafta if Trump doesn’t lift tariffs on Canadian and Mexican steel. He has also been leading opposition to Trump’s threat to impose tariffs on auto imports, which faces a May 18 deadline for a decision.

And on China, Grassley believes “it’s past time to strike a strong, enforceable deal so farmers, businesses and consumers can get the certainty they need and deserve,’’ Michael Zona, a spokesman, said in an email to Bloomberg.

Lengthy Tensions

William Reinsch, who worked for both Republicans and Democrats in the Senate before becoming an undersecretary of commerce in the Clinton administration, says even if a deal is done the tension will likely live on.

For months Trump has pushed Xi Jinping, his Chinese counterpart, to reform everything from the way China subsidizes industries to its intellectual property laws. But Xi has resisted.

China “can’t give him what he wants and now it is becoming clear,’’ Reinsch said. “But that creates a political dilemma for him because he staked his reputation on two things: being the tough guy but also the guy who closes the deal.”

The bad news for Trump is that even a deal won’t end the suspense. Questions over whether China is living up to its terms are likely to persist through the 2020 presidential campaign.

“The path to political success for the president is a really narrow one,’’ said Reinsch. “The odds are it is not going to be a happy ending for him.’’

©2019 Bloomberg L.P.

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