Trump Hired Robert Lighthizer to Win a Trade War. He Lost.
The Trump administration’s obsession with trade threats, tariffs, and bullying both allies and rivals into submission was based on an ambitious theory. It turned out to be a fallacy.
The administration has fired almost every salvo it has to force the Chinese into submission, and the two countries are further away from a trade deal than ever before.
The best way to understand the last two and half years of U.S. trade policy is as a protracted campaign aimed at forcing other countries to submit to U.S. demands.Lighthizer preferred bilateral negotiations because smaller countries are easier to bully one at a time than collectively.
Lighthizer’s critique of China—that it exploited loopholes in WTO rules to gain unfair trade advantages against the United States and others—was a decade ahead of its time.When previous administrations and multinational companies were still hoping for China to emerge as a responsible stakeholder in the global trading system, Lighthizer was warning that China was gaming the system to capture industry after industry. His views on Chinese behavior have now become mainstream in both U.S. political parties.
China has resigned itself to living with the U.S. tariffs for the time being and believes it can weather any economic harm.The United States in turn began to ratchet up the pressure by targeting flagship Chinese technology companies like the telecommunications giant Huawei and several makers of supercomputers.
The entire theory that had anchored the Trump trade policy turns out to have been wrong;it may live on, zombielike, but the already minimal returns will diminish more. The United States will hurt itself and others with tariffs without even the prospect of meaningful trade deals.