As the White House prepares to slap new tariffs on $US16 billion ($21.7bn) worth of Chinese imports tonight, Donald Trump has left no one in doubt about who he thinks is winning the trade war between the world’s two largest economies.
“How are we doing versus China?” the US President asked his chief economic adviser, Larry Kudlow, during a cabinet meeting in the White House late last week.
Kudlow replied by listing all the sectors he believed were doing badly. “Their economy is just heading south,” Kudlow said, adding: “I will just say right now their economy looks terrible.”
Trump was pleased with the answer he knew his adviser would give. “OK, thank you. Thank you very much, Larry.”
Minutes later at the same meeting, Trump targeted Beijing again, accusing China of flooding the US with deadly opioids, describing the act as “almost a form of warfare”.
Then he blamed China for undermining the fledgling relationship between him and North Korean dictator Kim Jong-un.
Trump’s critics are often tempted to dismiss these sorts of gibes as random comments from an unpredictable President. But there is growing evidence that something has changed fundamentally in US-China relations.
At almost every level and across a broad range of subjects from trade to defence and regional security, the US under Trump is taking a notably tougher stance against China than it did only a few months ago.
“The relationship has become far more competitive and more contentious,” Bonnie Glaser, a China expert with Washington’s Centre for Strategic and International Studies, tells The Australian. “The President does seem frustrated with China across the board.
“The Obama administration had tried to find areas of overlapping interests where the US could co-operate in the hope that would dampen the competitive nature of the relationship and prevent greater strategic competition. The Trump administration has abandoned that approach. It has embraced strategic competition and is looking to be more competitive across the board with China.”
Trump increasingly sees China as a major strategic and economic competitor, and he appears to believe confrontation rather than conciliation is a winning strategy.
Washington’s more assertive behaviour towards Beijing is being watched closely and with some concern by Australia, which fears being wedged by a feud between its closest ally and largest trading partner.
Trump’s approach to China is that of a dealmaker. On trade, he is pressuring Beijing relentlessly, boasting on Twitter about the impact of tariffs and his willingness to impose them, while agreeing to hold talks to allow Beijing a path to surrender or compromise.
Tonight in Washington, a Chinese delegation will hold talks aimed at resolving the trade dispute while the US will impose 25 per cent tariffs on $US16bn of Chinese goods. This is in addition to 25 per cent tariffs already levied by Washington on $US34bn in Chinese goods.
Meanwhile the Trump administration says it is moving ahead with plans to levy tariffs on $US200bn worth of Chinese goods — a stunning figure that would recast the US trade relationship with China.
Although Beijing has threatened to match dollar-for-dollar each US tariff with new Chinese tariffs, Trump has shown no sign of backing down until the trade imbalance between the countries — his stated reason for the tariffs — has been narrowed.
“Our country was built on tariffs and tariffs are now leading us to great new trade deals,” the defiant President tweeted last week.
His starting point is that the US trade deficit means China will be the ultimate loser in any showdown.
Says Trump: “When a country is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win.” But his showdown with China is not cost-free.
The retaliatory tariffs imposed on US imports by China, particularly on US farm staples such as soybeans, are striking at the heart of Trump’s base in conservative rural farming communities.
The administration has been forced to launch a $US12bn bailout for US farmers caught in the crossfire of the trade war amid fears this will harm Republican hopes of retaining control of both houses of congress in the November midterm elections.
But the administration’s tougher stance against China now extends well beyond trade.
On defence and security, the administration has become increasingly hawkish towards China in both rhetoric and actions.
Last week the Pentagon’s annual report on China was the most bluntly worded appraisal yet of Beijing’s military expansion and ambitions. It accuses China of sending long-range bombers farther from its shores than ever in “likely” training for strikes against the US and its allies.
“Over the last three years, the PLA (People’s Liberation Army) has rapidly expanded its overwater bomber operating areas, gaining experience in critical maritime regions and likely training for strikes against US and allied targets,” the report says.
“The PLA may continue to extend its operations beyond the first island chain, demonstrating the capability to strike US and allied forces and military bases in the western Pacific Ocean, including Guam.”
China has described the Pentagon report as a gross exaggeration and “pure guesswork”.
But it follows the bipartisan passage in congress this month of a muscular US defence bill that authorises $US719bn in spending, a 2.23 per cent real increase.
The impetus for the increase was China’s growing strategic ambitions in the South China Sea and the Pacific. The spending bill stated that “long-term strategic competition with China” was “a principal priority for the US”, requiring a “whole-of-government strategy”.
The response from China’s Defence Ministry was blunt. “The content of this law abounds in Cold War thinking, exaggerates the level of the China-US confrontation, interferes in China’s internal affairs, violates the One-China principle and three China-US communiques, undermines the atmosphere of development of China-US military ties, damages China-US mutual trust and co-operation,” it said.
The Trump administration also named China as a key reason for the announcement this month that the US will develop a stand-alone military space force by 2020 to counter anti-satellite weapons, lasers and hypersonic missiles.
“We understand the message that China was sending — that they could take out a satellite in space,” Defence Secretary Jim Mattis said.
In the South China Sea, when China landed strategic bombers on a disputed island reef for the first time in May, the US responded robustly by stepping up freedom-of-navigation exercises and rescinding Beijing’s invitation to Pacific Rim military exercises.
“In the security sphere, the administration is pushing back in ways that the Obama administration didn’t do,” says Glaser.
“We are seeing a tougher policy on the South China Sea, while on North Korea we see the President in his rallies questioning whether China is actually implementing the sanctions.
“He has also mentioned China in the context of the new space program.”
In recent weeks, Trump has thrown other accusations at Beijing, including that it is seeking to interfere in US elections.
“All the fools that are so focused on looking only at Russia should start also looking in another direction, China,” Trump tweeted last weekend, referring to countries that may try to interfere in the mid-term elections.
In June, congress introduced a bill to crack down on Chinese political interference in the US, saying Beijing’s activities were “intended to penetrate or corrupt democratic countries”.
Trump’s tougher approach to Beijing contrasts with much of his first year as President, when he concentrated on building his relationship with China’s President Xi Jinping. During his early months in power, Trump refused to label China as a currency manipulator — as he had done on the 2016 campaign trail.
He also said little about militarisation in the South China Sea, and although he complained about the trade imbalance with China, he did not do anything about it.
The most common explanation for this initial inaction was that Trump needed Beijing to help the US crack down on China’s closest ally, North Korea, before the US President’s engagement this year with Kim.
But now that Trump has a direct, if unreliable line, to the North Korean leader, he has been more willing to step up pressure on China over other issues.
“We have seen a toughening of the policy towards China in this second year (of the Trump presidency),” says Glaser.
“In Trump’s first year he had two summit meetings with Xi Jinping and that did seem to keep some of the competitive aspects of this relationship under control.”
The question is whether this tougher approach to China will work. It is a high-risk strategy but one that bears the hallmarks of Trump’s muscular approach to other foreign policy challenges, including Iran, North Korea and Turkey.
Glaser says Trump’s forthright approach and his broadbased criticisms of Beijing have forced the Chinese to reassess what America’s bigger game plan is.
“It’s hard to know whether the President is seeking to use some issues to gain leverage over others,” she says.
“I think that is the way the Chinese see it. They think that he is trying to use issues such as Taiwan, North Korea and South China Sea just to force China make concessions on trade.”
Either way, she says, the Chinese now realise that they are dealing with a US president who is willing to push back hard against their global ambitions.
“The Chinese thought they had Trump wrapped around their little finger for a while,” Glaser says.
“But now they realise he is more unpredictable than they thought.”
Cameron Stewart is also US contributor for Sky News Australia.
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