Wednesday, May 15, 2019

“We All Want to Know How This Story Ends”’

Capitol Hillers on both sides of the aisle, farmers, columnists, ed boards, business groups, and former Trump advisers all wonder — does the president have an endgame strategy for winning the China trade war?

My take: Those panicking about Trump’s apparent high wire act on tariffs often miss five things about his mindset:

A. The president thinks he can substantively and politically win a trade war with China as long as there is a conclusion (deal or no deal) he can spin as “strength” before the fall of 2020.

B. Trump believes tariffs are doing something none of his recent predecessors have been able to do — influence China’s behavior regarding its economic relationship with the U.S.

C. Trump doesn’t care one bit that establishment types like Bob Zoellick think he is being overly simplistic in his approach.

D. Trump doesn’t think Democratic leaders (long-time critics of China’s trade and economic practices) have a winning argument to make against him.

E. Trump thinks China’s weakening economy buys him time to address the concerns of U.S. farmers and others about the domestic impact of the trade war.

Speaker Pelosi is scheduled to meet with USTR topper Bob Lighthizer on Wednesday; everyone will watch the stock market; and Iowa’s Chuck Grassley will lead the “oh my” chorus worried about what’s happening.

Trump will likely continue his “don’t ever let them see you sweat,” optimistic tone in his Twitter and on-camera comments on China. That reassures the domestic audience, unsettles the Chinese, and allows Trump to (for a change) play the happy warrior.

In fact, Trump doesn’t have an actual endgame, because his endgame depends on if, when, and how Xi Jinping blinks. Trump believes he has the leverage and time to wait for the blink.

Right now, it is not an overstatement to say that much of the rest of Trump’s term, and his prospects for a second term, depend on if he is right about this bet.

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