‘Trump Time’ Meets Reality as Trade Talks Test His Speed Demands
A plan to force China into a deal by March 1 appears to be bogging down with the two sides now contemplating a 60-day extension.
(Bloomberg) -- Sign up for our new China newsletter, a weekly dispatch on where China stands now and where it's going next.
Donald Trump’s aides like to say the president prefers to do things in “Trump time.” Time is money. Trump moves fast. He wants deals and he wants them now.
That’s been evident in his approach to trade and China. But there’s growing evidence that the unforgiving reality of the calendar is catching up with Trump and his trade agenda.
A plan to force China into a deal by March 1 appears to be bogging down with the two sides now contemplating a 60-day extension. Talks with the European Union and Japan over separate trade deals have yet to get started and could be derailed if Trump goes ahead with threatened auto tariffs that would hit both allies. The long-stated goal of landing a trade pact with the U.K. is caught in the ever-accelerating uncertainty over Brexit.
Meanwhile, Trump’s own political clock is ticking, with the 2020 campaign nearing and putting increasing pressure on him to deliver the trade deals he pledged even as that very promise reduces his leverage at the negotiating table.
There are three broad reasons things may not get any better any time soon.
Trade deals are hard, take time
Trump’s entire approach to China has been to wage war in order to secure a peace on American terms. And in one respect that has worked: There is no doubt the tariffs he has imposed on $250 billion in imports from China has grabbed the attention of Chinese President Xi Jinping and brought him to the negotiating table.
But Trump appears to have over-estimated his own power in these talks. There is a reason the original package of U.S. demands to China was dubbed the “surrender-or-die” list by experts. Trump’s trade hawks believe nothing short of a Chinese capitulation and a fundamental reworking of its economic model will deliver the altered relationship they are after. They seemed to think that if the U.S. just used a tool that no one in recent history had dared to use as aggressively -- tariffs -- it could force that capitulation.
China, though, has retaliated and demonstrated that it also has leverage -- just ask an American soybean farmer -- and that it’s not willing to cave on many U.S. demands such as abandoning the industrial subsidies at the heart of its economic model.
Trade negotiations are laborious and involve diving into a deep pool of detail. But the talks with China, the EU and Japan have all been slow to get off the mark.
In the case of China it took more than a month after the Dec. 1 dinner between Trump and Xi in Buenos Aires for the negotiations to get started in earnest. At the senior level this week’s face-to-face meetings in Beijing mark only the second round since the dinner. It’s perfectly normal that people on both sides of the table say they need more time.
So it’s not clear that U.S. tactics are delivering in any negotiating room. Or that they have embodied the urgency that Trump insists they should, which matters for the next point.
Everyone has a political calendar
At some point everybody’s term runs out in politics. The 2020 U.S. presidential campaign is just around the corner and the Democratic field of challengers is growing rapidly. Trump and his White House are already working to frame the debate by declaring an economic war against “socialism” and a security crisis on the southern border.
America’s 2020 dance is not lost on the economies across the negotiating table from Trump, who needs to be able to carry trade victories into next year in order to justify his use of tariffs and what many Democrats and Republicans alike see as a potential electoral vulnerability.
But all leaders have their own political calendars. That makes the windows to cut trade deals this year few and narrow.
The annual session of China’s National People’s Congress is due to begin March 5 and conclude two weeks later. It is Xi’s political prom. It constrains what his negotiators can do at the table before it and explains why the Chinese leader may not be able to sit down for a summit with Trump until April.
In the EU, European parliamentary elections are due in May. They in turn will help decide the makeup of the European Commission, with the current commission ending its five-year term at the end of October.
Japan has important local elections in April and polls this summer will decide control of the upper house of the Diet. And who knows what will happen in the U.K.
Economies grow and slow
Time and trade negotiations don’t happen in an economic vacuum.
Trump has proclaimed that China’s slowing economy -- for which he claims some credit -- has given the U.S. the upper hand. And there’s some truth to that. But good economies come and go. What feels like economic leverage can, over time, shift in unexpected ways.
The slowdown in China’s economy has hit U.S. and European corporate results and spooked markets. Economists fear what it might do to the global economy and how it may blow back to hit the U.S., where fears of a recession are now at least part of the conversation.
The nerves in financial markets have in turn fed a new sense of urgency and desire in Trump for a deal with China. But trade negotiations usually follow a pattern. The patient party usually wins. And it’s not clear that “Trump time” ever comes with patience attached.
To contact the reporter on this story: Shawn Donnan in Washington at sdonnan@bloomberg.net
To contact the editors responsible for this story: Simon Kennedy at skennedy4@bloomberg.net, Sarah McGregor, Brendan Murray
©2019 Bloomberg L.P.