The US is showing the world ‘how not to mobilise against China’

  • President Donald Trump’s national trade director Peter Navarro blames trade deficits with China and Europe for the loss of American manufacturing jobs.
  • Fred Bergsten, a former Treasury official, says Trump’s strategy of steel and aluminium tariffs offers a lesson on “how not to mobilize against China.”
  • The measures have alienated key allies like Canada, Mexico and the European Union, which Bergsten says the US should instead be trying to rally around its hawkish China agenda.

President Donald Trump’s chief trade warrior Peter Navarro was out in full force on CNBC Thursday morning, making his case for sharp tariff spikes against major commercial partners that many fear could spark a global trade war.

The director of the newly-formed White House National Trade Council focused his ire on China in particular.

“We have trade deficits with every single major trading partner,” Navarro said, implicitly repeating the lie the president recently bragged about when he invented a trade deficit with Canada.

“The biggest one is China. […] For every billion dollars of trade deficit we have according to some estimates, that’s 6,000 jobs we lose. We’re essentially shipping factories over there.”

Beyond its misleading zero-sum logic, which ignores multi-national companies and global production chains involving a web of different firms and countries, Navarro’s argument belies a policy proposal that is counterproductive to its own ends: punishing China.

Fred Bergsten, veteran trade negotiator and director emeritus of the Peterson Institute for International Economics (where I used to work), was a long-time critic of China’s currency manipulation when the country was actually doing that sort of thing, as well as other unfair trade practices that continue, including violations of intellectual property rights.

However, Bergsten, a former Treasury official, argues in a new blogpost that Trump and his team offer a lesson in “how not to mobilize against China.

“Trump’s recent trade actions, especially the announced plans to impose steel and aluminium tariffs, will have little effect on China,” Bergsten writes. “In fact, they will make confronting China with an alliance of trading partners much harder.”

Trump’s abrupt withdrawal from the TransPacific Partnership agreement with 11 other nations already burned a lot of bridges. Now, Trump’s tariff plans are eliciting predictable threats retaliation from Canada to the European Union.

“To effectively attack China’s trade and investment policies, the United States must have allies,” Bergsten said.”The United States should thus seek to mobilize Europe, Japan, Korea, Canada, Australia, and as many emerging market economies as possible (including Mexico, Brazil, and India) to challenge the Chinese.”

That may sound constructive, but it’s hardly in line with the “America First” rhetoric championed by the administration.