Trump Advisor Admits Trade War Against China Failed
In an interview, former National Security Advisor Robert O'Brien admitted that "the Chinese didn’t honor" the terms of the deal, years after it was clear.
Former President Donald Trump's trade war with China did not work out as planned, and one of his former advisors is finally admitting as much.
This week, Semafor's Morgan Chalfant wrote about the potential trade policies of a second Trump administration. Toward the end of his first term, Trump reached a $200 billion deal with China. For his possible second term, though, Trump has suggested a 10 percent tariff across the board on all imports, with additional tariffs as high as 60 percent on goods from China, the country's third-largest trading partner.
"I don't think we're going to see a deal like we saw in the first term," Robert O'Brien, Trump's fourth and final national security advisor, told Chalfant. "I think people were generally happy with [the previous deal], but as it turned out, the Chinese didn't honor it."
Trump is famously fond of deal-making, styling himself as a master of negotiation. He also views free trade negatively, bucking decades of Republican orthodoxy.
In March 2018, Trump tweeted, "trade wars are good, and easy to win"—a perplexing display of confidence, even putting aside that he had little experience setting American trade policy.
In practice, this meant slapping tariffs of 10–25 percent on all imported Chinese goods, costing American consumers $42 billion in 2018 alone. China also retaliated by imposing tariffs of its own and importing fewer U.S. goods; American industries as far-flung as soybean farmers, craft distilleries, and Alaskan fishermen suffered.
In January 2020, Trump struck what he called a "historic trade deal" in which China agreed to make "massive purchases of Agricultural Product, Energy, and Manufactured Goods, plus much more," he announced. Under the "phase one" agreement, China would buy an additional $200 billion worth of American goods over the following two years—$77 billion in 2020 and $123 billion in 2021.
That claim "should be viewed with skepticism," Reason's Eric Boehm wrote at the time. In pre-trade-war 2017, the year used as the baseline to calculate the additional purchases, "total U.S. exports to China equaled about $186 billion. That means Trump is asking China to increase its purchases of U.S. goods by around 60 percent."
As it turns out, the deal was a lot of bluster, as O'Brien now admits. But none of this should have been news to him.
"In the end, China bought only 58 percent of the US exports it had committed to purchase under the agreement, not even enough to reach its import levels from before the trade war," wrote Chad Bown of the Peterson Institute for International Economics (PIIE) in February 2022. "Put differently, China bought none of the additional $200 billion of exports Trump's deal had promised." In August 2020, PIIE China expert Mary E. Lovely told The Washington Post that China was "not on target," and "even if they buy huge amounts, they're not going to be on target."
Worse, the deal did nothing to fix the damage Trump's trade war had already done. "After two years of escalating tariffs and rhetoric about economic decoupling, the deal did little to reduce the uncertainty discouraging the business investment needed to restart US exports," Bown wrote. "Most of Trump's tariffs remained in effect, especially on inputs, raising costs to US companies. And by failing to negotiate the removal of China's retaliatory tariffs, the agreement may have funneled any Chinese demand for US exports away from China's private sector toward its state-owned enterprises."
Not to mention that Trump's tariffs—in addition to those since imposed by President Joe Biden—continue to raise prices for Americans.
In fact, promising great economic results and not achieving them is key to Trump's record: After announcing the $200 billion deal in the first place, he tweeted that "it will bring both the USA & China closer together in so many other ways." And of course, Trump's anti-trade rhetoric was based on the trade deficit between the U.S. and China, which increased as a result of his policies.
Trump touted his tough trade war posture for getting the "phase one" agreement passed: "As a candidate for President, I vowed strong action," he said when announcing the deal. "I actually think I more than kept my promise."
It should be clear, then, that Trump's trade war as a whole was a miserable failure, with higher prices for consumers and fewer American goods sold.
