Trump’s Trade Reality Check Needed
President Donald Trump’s trade war continued its turbulent path this week. On Wednesday, a federal district court delivered a significant setback to Trump, ruling that his tariffs were illegal. However, on Thursday, an appeals court decided the levies could remain in effect for the time being. Then, on Friday, Trump accused China of violating a preliminary trade agreement and threatening new tariffs. As these events unfold and the U.S. legal system deliberates, it’s evident that the White House urgently needs a well-defined trade strategy.
Few topics are as central to Trump’s perspective as trade. For him, trade is not just an economic concern but a crucial indicator of America’s strength. Even matters of international relations, like Taiwan and the South China Sea, seem secondary to his focus on addressing China’s trade surplus with the U.S.
During his initial term, Trump initiated a trade war with China, aiming to punish China. This conflict resulted in a deal where China committed to increasing purchases of American goods and implementing structural reforms. However, this agreement largely failed, with China not meeting its promises. Trump has since criticized the Biden Administration for not enforcing the agreement.
Undeterred by the shortcomings of his first trade war, Trump launched a second upon returning to office this year. He surrounded himself with advisors who shared his preference for public confrontation and swift escalation to pressure China into negotiations. Trump’s strategy seemed to rely on the assumption that China’s economy was fragile and would yield under pressure.
This gamble proved unsuccessful. China responded with retaliatory tariffs and implemented new export restrictions on essential minerals and magnets crucial to U.S. industries. Chinese policymakers quickly worked to bolster their economy while strengthening trade relations with other nations. Instead of submitting, China retaliated.
As the economic consequences of the trade war grew, Trump instructed his Treasury Secretary, Scott Bessent, to negotiate a truce. China agreed, but this doesn’t signify the end of Trump’s trade conflict with China; it’s merely a pause. Trump will likely continue to focus on the trade imbalance with China until he secures an agreement that he can present as a victory to the American public.
However, therein lies the problem. Based on recent discussions with Chinese officials and experts, Beijing appears to have assessed America’s position and concluded that China is more capable of enduring economic hardship. China’s leaders are skeptical that any agreement with the unpredictable Trump will last. More fundamentally, they lack clarity on Trump’s specific objectives and what he’s willing to offer in return.
On Thursday, Treasury Secretary Bessent described U.S.-China talks as “open” and suggested a phone call between Trump and Xi Jinping. However, until the Trump Administration clearly defines its objectives, its strategy for achieving them, and its vision for a productive process, the U.S.-China trade war will remain deadlocked.
To be clear, the Trump Administration has valid concerns regarding China’s unfair economic practices. China’s subsidies, intellectual property theft, and preferential treatment of domestic industries have created market distortions. However, simply having grievances isn’t a strategy, and improvising daily won’t lead to successful negotiations.
The 90-day trade truce provides the Trump Administration an opportunity to prepare. This means abandoning the flawed assumption that Xi will give in under pressure and instead focusing on defining Trump’s specific goals and what concessions he’s prepared to make.
Ultimately, trade policy isn’t about scoring political points or undermining competitors. It’s about strengthening America, enhancing its security, and boosting its prosperity. To succeed, Trump must move beyond superficial actions and prepare for the demanding process of negotiating with China.
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