US-China Trade War: Trump’s Leadership Style and the world order

By Rashmi Muraleedhar

Issue Courtesy: CLAWS | Date : 15 Dec , 2018

Introduction

On the sidelines of the G20 meeting in Buenos Aires, US President Donald Trump and Chinese President Xi Jinping met and the former has agreed to temporarily halt the escalation of the ‘trade war’. This essentially means that President Trump has agreed to hold ratcheting up the US tariffs on $200 billion worth of Chinese goods from 10 percent to 25 percent on Jan 1st, as his administration had proclaimed it would do1. The measure is to allow for a more conducive environment to hold talks to settle the trade-related issues particularly dogging the Sino-US relations this year.

In May, the US Trade Representative published a damning indictment against Chinese trade practices in the Section 301 report. It is the basis of Trump’s policy of imposing sweeping tariffs on China as a punitive measure against its trade practices2. As it stands currently, the US has imposed tariffs on the US $250 billion worth Chinese goods. China has reciprocated in tit-for-tat tariffs on American goods worth the US $110 billion3. The list of complaints in the Section 301 Report includes several items ranging from reducing the trade deficit in goods between the two to reducing the ‘barriers’ China placed on foreign businesses to impede access to the Chinese market.

The Section 301 Report has forcefully argued that certain Chinese laws counteract IPR by forcing foreign companies to engage in joint ventures with local companies subsequently granting their new Chinese partners access and permission to use, improve or replicate proprietary technologies. The US is especially wary given the role technology plays in the plan for China’s economic development plan. The ‘Made in China 2025’ plan espouses national goals of achieving hi-tech dominance by 2025. Formally the goal is to break the reliance on foreign technology and pull up its own indigenous hi-tech industries4. However, as suggested by the case with Redcore, purportedly the first China-based web browser5, the model for ‘Made in China 2025’ might be premised on building up ‘Chinese’ hi-tech on already existing platforms. Increasing instances of industrial espionage and a steadily declining climate for foreign investors in China has sounded a warning that the US decided to heed6.

Strain in US-China relations

The tensions between the two countries seem to have spilled over to other aspects, with the stand-off between American and Chinese warships in the South China Sea7, and the extradition of a Chinese spy, accused of stealing trade secrets, by the FBI in Belgium8. In addition to ratcheting up tensions in the bilateral relationship in general, the efficacy of realizing particular objectives through unilateral punitive measures like tariffs is highly questionable. If the US seeks to bring down the ‘barriers’ to entry that American businesses face in China, a more direct way to achieve that would be to initiate Bilateral Investment Treaty negotiations. If the grievance is against cyber espionage, hacking, and disruption9, then perhaps the most effective step forward would be to renew a treaty similar to the 2015 Xi-Obama cyber ceasefire. The particular mode of imposing wide-ranging tariffs is especially punitive because the Chinese economy still depends significantly on export earnings. The move is unilateralist and seems to send a broader message, but to whom exactly?

Trump’s Leadership Style

Trump’s style of leadership is distinctive as it is highly confrontational. As an elected leader he has not followed suit with his predecessors and honored deals made by previous administrations. Trump is not afraid of diverging from previously set precedents. Under his leadership, USA has exited from UNESCO, UNHRC, the TPP, the JCPOA with Iran and the Paris Climate Change Agreement. Distinguishing himself from his predecessors, he has not been commodious or flexible in shaping his policy platform after being elected to take on the mantle of responsibility of the country as a whole, including those who voted against him. Rather he seems wedded to taking decisions that remain popular with this core support group10. He is only concerned about promoting a particular brand image to his core support group. He projects himself as a businessman, with a businessman’s approach to public policy11. However, his business may not be founded in making a good product, but rather in projecting a particular brand. Underlying weaknesses are disposed of in hushed negotiations and settlements, while anything to promote a particular brand is trumpeted with great vehemence12. Trump’s approach to foreign policy should be viewed in the same way – surely, the bombast of wide-ranging unilateral tariffs against China is to aid in a particular brand image.

Impact on Liberal World Order

Looking at it this way, the most disquieting aspect of the US-China trade war is the abrading impact of Trump’s indifference to precedence and continuity on the liberal world order. The international political sphere is anarchical by nature, and a rules-based order has put in place mechanisms to facilitate cooperation and settle inter-state disputes in an environment that is underlined by the security dilemma and distrust. Unilateralism and indifference to honouring international treaties signed by previous administrations introduce greater uncertainty and room for insecurity in inter-state dealings. It is understood that the complaints against Chinese trade practices are not voiced only by the American Big Business interests that Trump is representing. It is notable that in an era of high polarization in American society, there is bipartisan consensus on the China policy13. The complaints against Chinese trade practices isn’t restricted to American businesses, but EU and Japan have also subsequently voiced grievances14. However, the current preference of either resorting to confrontational unilateralism or quietly negotiating bilateral agreements to circumvent the disruption Trump’s leadership has posed is not the way forward. There is a need for re-infusing trust and hope in multilateral mechanisms to handle inter-state disputes. There is a need for states to come together and act in concert. Such efforts could only bear fruit if Trump’s leadership style is understood. There is an urgent need to find solutions that would attract Trump’s penchant for showmanship while founded on meticulous negotiations and settlements that can be agreed upon by all the parties.

References