The Trump Administration Is Just Grasping at Trade Policy Straws Now

Look who discovered a decade-old trade gambit?

Photo by CHUTTERSNAP on Unsplash

Full disclosure: the hard-working staff here at Drezner’s World is suffering from a mild headache. Even fuller disclosure: that headache was caused by me banging my head against a desk repeatedly after reading this Politico story by Megan Messerly, Ari Hawkins, Phelim Kine, and Felicia Schwartz.

Why? Well, let’s excerpt this article to see what could possibly be so vexing for someone who has been super-skeptical of how the Trump administration’s 2025 trade policy will play out.

Here’s the gist of the Politico story:

President Donald Trump wants Chinese leader Xi Jinping to call. Making trade deals with China’s neighbors is part of a broader White House strategy to get him to the negotiating table.

As the two countries face off in a bitter trade war, the administration’s current theory of the case, which has been circulating among Trump allies and was confirmed by a White House official, is that tariff deals with Asian countries, as well as the dozens of others across the globe seeking to negotiate with the U.S., will isolate China, disrupt the Chinese supply chain and threaten to cut the country off from the rest of the world.

The White House sees the wave of announcements from companies moving manufacturing operations to the U.S. and its broader sectoral-based tariff strategy as key components in getting Xi to cooperate as well, said the official, who like others in this story was granted anonymity to discuss the administration’s strategy.

“Once you see a lot of countries — not just in southeast Asia or Asia, but all over — you’ll see that they’re willing to make deals with America, and that exerts pressure on China to hopefully come to the table,” the official said. “Because China’s economy is reliant on a lot of these other countries around the world, I think once people see, hopefully, deals being struck with these countries, that exerts pressure on China.”….

“The theory is, get all of Asia but China to the table, incentivize them with lower tariffs and U.S. companies will leave China,” said one person close to the White House. “And yes it makes sense. It’s happening already. But is it enough to move China? Big question.”

To be perfectly honest: entirely stripped of context, this is not the craziest idea. Building up a trade coalition to deal with China makes some intuitive sense. While collective action is hard at the global level, the United States could exercise leadership and form such a coalition. It echoes Victor Cha proposal for a defensive coalition to deal with Chinese coalition, for example.

Why, then, is this such an exasperating read? Because the context is damning. The first and most obvious point is that this is exactly what the Obama administration was attempting to do more than a decade ago. The idea behind a proposed Trans-Pacific Partnership (TPP) was that if the U.S. and its closest trading allies in the region wrote the rules on regional trade, China would be compelled to adopt similar rules.

Indeed, this was precisely the argument President Obama made in a Washington Post op-ed that advocated for congressional approval of the TPP:

Building walls to isolate ourselves from the global economy would only isolate us from the incredible opportunities it provides. Instead, America should write the rules. America should call the shots. Other countries should play by the rules that America and our partners set, and not the other way around.

That’s what the TPP gives us the power to do. That’s why my administration is working closely with leaders in Congress to secure bipartisan approval for our trade agreement, mindful that the longer we wait, the harder it will be to pass the TPP. The world has changed. The rules are changing with it. The United States, not countries like China, should write them. Let’s seize this opportunity, pass the Trans-Pacific Partnership and make sure America isn’t holding the bag, but holding the pen.

Of course, the TPP was never ratified and Trump abandoned the deal during his first week in office in 2017. So it’s a bit rich to see anonymous Trump sources replicating the TPP logic and rhetoric in explaining their current trade policy approach.

The other reason this is so exasperating is that prior to articulating it, the second Trump administration took about every conceivable action to sabotage this strategy. One could squint real hard and interpret Trump’s efforts at reciprocal tariffs as a means of applying secondary sanctions against third-party countries in an effort to line up a coalition to pressure China. The flaws with this gambit are numerous, including but not limited to:

1. As previously noted, it is hard to build a multilateral coalition to punish the world’s largest trading partner;

2. Secondary sanctions are a lousy way to build a stable multilateral coalition;

3. Trump’s trade policies have been such a noxious mix of bullying and prevarication that no one believes he is seriously committed to confronting China on this issue. He already backed down on consumer goods. One former Trump official told Politico’s reporters: “he blinked already, which really does harm his credibility on these things.” AEI’s Derek Scissors told the same reporters, “Trump is just backing down. He’s never wanted to confront the Chinese…. his inclination is to bluster a great deal and then back off.”¹

4. Trump wants these countries to give up on Chinese trade and foreign direct investment in return for… what, exactly? Praying that Trump does not alter the deal further?! It is noteworthy that while China is guilty of multiple trade sins, countries like Vietnam see Beijing as the steadier, more reliable trading partner compared to the Trump administration;

5. Trump is personally driving this particular policy bus; the Politico story quotes multiple Trump allies saying some version of, “this is one of those areas where Trump is on his own.”² This means that foreign negotiators lack reliable interlocutors who are not the president. These will not be easy negotiations. Wendy Cutler warns in Foreign Policy that, “the administration will quickly see that it has a serious trust deficit with partners, many of which feel that they have been mistreated and disrespected with Trump’s high tariffs.”

The basic problem is that as hard as this task would have been under normal circumstances, Trump has made it that much harder for the U.S. to corral any allies, as The Daily Show’s Desi Lydic illustrated earlier this week.

So it’s nice to see Trump officials attempt to sanewash the epic clusterfuck of last week, but I ain’t buying what they are selling. This retread strategy is unlikely to work. China is better prepared to prosecute this trade war than it was during Trump’s first term. So far, Trump’s madman gambits have, predictably, fallen flat.

Other than that, everything is fine.

1. Full disclosure: Derek and I were in grad school together back in the day. It’s fun to know that I can hear those quotes in Derek’s voice even though it’s been decades since we chatted.

2. I would have preferred being wrong about this particular fact — and yet, here we are.