Chinese President Xi Jinping (L) and US President Donald Trump © Reuters
The meeting next week with China will be a very difficult one in that we can no longer have massive trade deficits...— Donald J. Trump (@realDonaldTrump) March 30, 2017
Reuters: Trump says trade gap will make China meeting 'a very difficult one'
U.S. President Donald Trump set the tone for a tense first meeting with Chinese President Xi Jinping next week by tweeting on Thursday that the United States could no longer tolerate massive trade deficits and job losses.
The White House said Trump would host Xi next Thursday and Friday at his Mar-a-Lago retreat in Florida. It said Trump and his wife, Melania, would host Xi and his wife, Peng Liyuan, at a dinner next Thursday.
In a tweet on Thursday evening, Trump said the highly anticipated meeting between the leaders of the world's two largest economies, which is also expected to cover differences over North Korea and China's strategic ambitions in the South China Sea, "will be a very difficult one."
"We can no longer have massive trade deficits and job losses," he wrote, adding in apparent reference to U.S. firms manufacturing in China: "American companies must be prepared to look at other alternatives."
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WNU Editor: President Trump is right. China is dependent on having a trade surplus with the U.S. to finance its growth .... and any alteration in this arrangement will have dire consequences on its future plans and on the promises that the government has made to its civilians that in exchange for social peace, they will have jobs and a better standard of living.
The type of "trade arrangement" China currently has with the US is unsustainable by the US. Sort of like $100 per barrel of oil, anyone staking their financial future on that price for oil deserved/deserves no sympathy when the price collapsed. As is with China, they deserve no sympathy when the whole thing collapses and takes their economy with it as will happen if current trade policies are allowed to continue.
ReplyDeleteWhile China is "dependent" upon the US market, the US is dependent upon "made in China." The US and China can work together to find constructive solutions to the current situation or they can continue the current path and when the whole thing collapses the economies of both countries can collapse. Since the Us is more dependent upon "made in China" than China is on "sold in USA", such a situation is more detrimental to the US than it is to China.
During negotiations "the dealmaker" will need to recognize China holds the high cards and is the stronger power. From this realization, a good deal is possible.
When "the dealmaker" won the election, I wondered here and elsewhere if the he could adjust to negotiating when his opponent has the advantage. From observation, it seemed to me that most of his deals in the past were negotiated when he held the high cards.
While the jury is still out so to speak on whether he can negotiate effectively when his position is weaker than that of the other side, so far the answer seems to be a resounding no he cannot adjust to being in a weaker position than the other side.
So far we haven't seen anything yet. We need to negotiate better trade agreements with China, we need to negotiate an end to Cold War II. and in each of these the American position is weak relative to those of Russia and China. With a recognition of reality good outcomes are possible. Failure to recognize reality seldom ends well.
Of course in the case of negotiating an end to Cold War II this is further complicated by the fact that certain officials in the US foolishly chose to back Ukraine, impose sanctions on Russia, and compounded things by pouring more fuel on the fire so to speak by obsessing over so called "connections" between team Trump and Russia and concocting tales of Russian interference in the US election. No wonder Russians hold us in utter contempt.
It's going to be EXTREMELY difficult to negotiate an end to this, in this environment. The alternative is to fight Cold War II where we are at a decisive disadvantage. Not only are we at a decisive disadvantage but there is no good reason for it!!