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China’s Trump dilemma: how to punish Beijing without harming the US economy and its own chance at reelection



Many Americans, especially farmers in strategic heartland states hit by Trump’s trade war, are hoping for an additional $ 200 billion in US exports to China as the deal promises to bring down their bottom line line. But so far, China has bought less than half of the energy, agriculture and manufactured goods set to deal, according to some estimates, overturning a key argument in Trump’s reelection effort: that he successfully forced the China cut a better trade deal in its first term in office.

“The deal has always been a political agreement in which Trump’s candidate can come out and say $ 200 billion and have a good round number to throw in there,”

; said Chad Bown, a senior fellow at the Peterson Institute for International Economics.

But Bown points to a potential silver lining: if China continues to not live up to its side of the deal, it will ease Trump’s narrative and allow him to double his anti-China rhetoric.

“What the Covid shock did was create a political space for the administration to say even if they wanted to keep the deal, China would not survive – and there, they had a reason for it not to work.”

Disagreement on Capitol Hill

Trump has repeatedly blamed China for its failure to act earlier and alerted the world to the spread of the virus, which has now killed more than 329,000 people worldwide, including more than 93,000 in the US on Thursday.

Throughout Washington, there is a general agreement that needs to be made about China, but that is where unity ends.

As the President tries to pin the coronavirus fallout on what the White House has said is China’s deliberate effort to hide the severity of the outbreak, lawmakers on Capitol Hill – both Republicans and Democrats – tell CNN they believe it needs US to drill again. its relationship with China.
But the dynamics of a presidential election, coupled with internal disagreements over how far the US should go to punish China, are likely to limit the scope of any bipartisan deal. Democrats are happy to give Trump a significant win, and there is also concern that any significant action will be extended to a wider tit-for-tat that could have a negative impact on the weakening of the US economy. .

In recent weeks, lawmakers have begun negotiating a series of steps to move the supply chains of critical medical and drug supplies back to the US, including tax breaks and incentives for businesses that manufacture goods in the US.

China remains the center of supply chain worldwide. The disruption will probably take years and possibly cause short-term economic pain in the process as countries find their own way.

Meanwhile, lawmakers in the United States are passing little penal steps.

On Wednesday, the Senate passed legislation that would overturn Chinese companies that traded in US stocks.

Earlier this month, Republican Sen. Lindsey Graham of South Carolina has introduced legislation to slap China on sanctions if the country does not come up with coronavirus origins. The President will be given 60 days to prove that China has complied with requests for information and other demands on the US, including the release of pro-democracy proponents in Hong Kong arrested on the removal of pandemic of coronavirus.

Republican Senator Ted Cruz of Texas has a bill to punish Chinese officials, and Democrats say they are open to supporting measures to punish China for losing to the US and the world how bad coronavirus returns in December.

But Democrats are also cautious about playing loud in Trump’s anti-China narrative just months before the election. Counseling in China today could give Trump the escalation he needs to free his administration from its own shortcomings in the pandemic response and persuade him to turn to a career that turns into a “America First” referendum vs. in China.

“I don’t think there’s anyone nationwide who believes that coronavirus is his fault,” North Dakota Sen said. Kevin Cramer, a loyal ally of the President. “Instead, it may have identified some of its strongest demands, such as its warnings about China and globalism and the weakness of the supply chain.”

Sending a message

Meanwhile, the administration has focused its efforts on measures that could send a message to China without affecting the US economy, including national security-related sanctions and a further crackdown on China’s 5G network. On Friday, the Trump administration moved to block shipment of semiconductors to Huawei Technologies from global chipmakers, an action that could ease tensions in China.

Dissatisfaction towards China is growing, even with some of Trump’s advisers susceptible to economic ties to China. But some of his top trade advisers – including Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer – have been tapping into the fears of losing a tough Phase One deal.

The U.S. agriculture and manufacturing sector was heavily involved in the President’s trade war with China before its signing in January.

In his 2016 campaign and since, Trump referred to his business savvy as a remedy for the country’s trade consequences. He criticized past trade relations with Canada, Mexico and China and promised to better deal with some of America’s largest trading partners.

He used his stance with China as a cautionary tale of what would happen if Americans voted for anyone else in office, and he continues to do so even today against his outspoken Democratic opponent former Vice President Joe Biden, despite the future of his trade deal with China has a question.

Cost for swing states

But Trump’s trade war with China had economic consequences for swing states such as Ohio and Pennsylvania, which raised tariffs on the cost of doing business for manufacturers and left farmers seated. to the tons of unsold crops that would normally be shipped to China.

Farmers won & # 39; The coronavirus currency will not be available until June as losses continue to mount
As a result, manufacturing has seen a mild recession in 2019, with the factory shrinking by 1.3% for the year, according to the Federal Reserve. And family farm bankruptcies in 2019 increased by almost 20% from last year, according to official court data. That figure only skyrocketed in 2010, following the Great Recession, when Chapter 12 losses rose 33%.

With Chinese purchases remaining at their 2017 levels, the administration said it could extend the farm subsidy program for a third year – much needed by farmers trying to meet. Such expansion will expand what has become a massive industry bailout.

US tariffs increase costs for American companies importing Chinese goods, and with fewer customers making purchases as demand for Covid-19 outbreak saps, the new trade war is increasingly centered on the economy at large. The US still has most of its tariffs on $ 360 billion worth of Chinese imports in the area, despite signing a trade deal in mid-January.

Aside from the election, now may not be the right time for the US to respond. Republicans are aware of this, and why it has not yet pushed for a major reform proposal to move businesses back to the US or punish China for its response to the coronavirus.

Republicans are sensitive to Trump acting aggressively or very quickly against China at a time when they need China to justify ending its trade deal to buy major US agricultural products such as soybeans. Senators say the sanctions on China today when the US relies on them for exports and for the manufacture of products such as drugs and personal protective equipment is a mistake.

“Especially in our (agricultural) sector, we still need the Chinese markets,” Sen said. Roy Blunt, a Republican from Missouri, told CNN.

John John Thune, a Republican from South Dakota, said the GOP is serious about trying to find ways for major US companies to move factories back to stateide, but that won’t happen overnight. In fact, industries that can pay workers less overseas are less likely to accept the law forcing them to move.

“There’s going to be a very strong discussion about it. I don’t know what the outcome of the discussions will be,” Thune said. “We are in the middle of a pandemic. That is our first priority, but I think being responsible for this hope and eventually it will be important and many of our members feel very strongly about it.”


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