President Donald Trump, fed up with hearing he was weak on China, assembled his senior trade team at the White House on May 22 and vented, according to officials who were involved. He wanted a tougher approach, including tariffs he could use as a weapon to force trade concessions.
Treasury Secretary Steven Mnuchin, who favored a milder approach, had spent months maneuvering to become the administration’s point person on talks with China. Now, along with his administration rivals, he was getting a dressing down, the officials say.
“Get moving,” the president told them.
Within 10 days, the U.S. put aside talk of an economic truce with China and said it was preparing to move forward with $50 billion in tariffs on a range of imported products. It told the European Union, Mexico and Canada it would impose tariffs on steel and aluminum imports and threatened to do the same on imports of autos.
“The person in charge of trade is, unequivocally, President Trump,” says National Economic Council Director Larry Kudlow. “Anyone who tells you different is just wrong.”
The abrupt turn to tariffs, after several weeks during which tensions were easing, was the public manifestation of a tumultuous decision-making process taking place inside the White House on trade, Mr. Trump’s signature economic-policy issue of 2018.
Aides have cursed at one another in front of Mr. Trump as they struggle to reconcile clashing views on whether to impose tariffs to force concessions. Mr. Trump encourages the competing voices, and the status of senior officials rises and falls depending on the president’s shifting goals.
Competition on the trade team for the president’s ear is intense, with Mr. Mnuchin, U.S. Trade Representative Robert Lighthizer, White House trade aide Peter Navarro, Mr. Kudlow and others routinely jockeying for position. In early May, Mr. Navarro and Mr. Mnuchin feuded in Beijing and battled over the cable-news airwaves over whether to move ahead with tariffs, with Mr. Mnuchin calling off a trade war and Mr. Navarro restarting it.
The result has been conflicting signals from the U.S. on its goals and how far it will go to achieve them. That is creating uncertainty in China, Europe and elsewhere about how far to push the U.S. and to what end, increasing the risk of an escalating trade war.
The turn to a tougher U.S. stance has trading partners up in arms. Mr. Mnuchin was rebuked by rival finance ministers at a meeting in Canada last week, ahead of a summit of Group of Seven leaders that starts on Friday, where Mr. Trump could face similar blowback. In Beijing, China’s leadership offered to buy as much as $70 billion in U.S. agricultural, energy and other products, but only if the U.S. abandons its tariff threats.
The Politics of Trading
China's trade surplus with the U.S. continues to rise, while its global trade surplus has been shrinking.
U.S. trade deficit with China
0% OF GDP
–1
–2
–3
2000
’05
’17
’15
’10