What’s behind Trump’s trade war with China

JUDY WOODRUFF: It was yet another rocky day
when it comes to the trade war between the U.S. and China. As we reported, the markets reacted strongly. Chinese and Trump administration officials
are supposed to meet later this week to hammer out a trade agreement. But getting a deal done looks even dicier
than it did a week ago. Over the weekend, the president unexpectedly
threatened to raise more tariffs on Chinese goods. This all fits right in line with President
Trump’s approach to China. And that’s the focus of tonight’s “Frontline.” It’s a joint investigation with NPR. Laura Sullivan of NPR is the correspondent. She will talk with Yamiche Alcindor in a moment. But, first, here is an excerpt about how the
president surprised the world with tariffs on China after the two sides had already made
some progress. ®MD+IT¯®MD-IT¯LAURA SULLIVAN, National
Public Radio: Their negotiators agreed on a plan for China to buy billions of dollars
in U.S. products like beef and natural gas. But behind the celebration, Trump’s nationalists
had devised a different plan. STEVE BANNON, Former White House Chief Strategist:
We had a couple of tricks up our sleeves. (INAUDIBLE) and I started to dust off the
secret weapon we had, to call a national security emergency, kind of what we’re doing on the
border right now, that you use the national security emergency powers that are invested
in the Defense Department to go after steel, aluminum, maybe autos, but eventually technology. It’s time to get it on. LAURA SULLIVAN: By March 2018, the president
was ready to take action. DONALD TRUMP, President of the United States:
Thank you very much, everyone. We have with us the biggest steel companies
in the United States. They used to be a lot bigger, but they’re
going to be a lot bigger again. LAURA SULLIVAN: Executives from the steel
and aluminum industry were hastily gathered in Washington. MICHAEL WESSEL, U.S.-China Economic and Security
Review Commission: They were all called to the White House, had the meeting. And at that time, the president announced
what he was going to do. DONALD TRUMP: Next week, we will be imposing
tariffs on steel imports and tariffs on aluminum imports. LAURA SULLIVAN: What was the reaction? MICHAEL WESSEL: The reaction was surprise. DONALD TRUMP: It will be 25 percent for steel. It will be 10 percent for aluminum. MICHAEL WESSEL: This moment was a seminal
moment in trade policy because it’s the most aggressive use of this kind of trade law approach
ever. This is done under the theory of national
security. DONALD TRUMP: We need it. We need it even for defense, if you think. I mean, we need it for defense. We need great steel manufacturers. MICHAEL WESSEL: Steel was important to your
national security broadly, military, critical infrastructure and the economy as a whole,
and that had never been done before. DONALD TRUMP: Thank you very much, everybody. Thank you. Thank you very much. LAURA SULLIVAN: The sweeping steel tariffs
also surprised America’s closest allies. It turns out those tariffs hurt U.S. allies
more than China. That’s because allies like Canada sell much
more steel to the U.S. than China does. At the State Department, the top China specialists
quickly started getting complaints. What were some of the United States’ allies
saying? SUSAN THORNTON, Former U.S. Assistant Secretary
of State: Well, certainly, the allies were very much taken aback that they were the target
of the steel tariffs. They don’t understand the focus on tariffs. They don’t understand the focus on deficits. They don’t understand the rejection of the
international trading, you know, norms and institutions. They don’t understand the U.S.’ rejection
of global free trade, since this is the system that we basically set up. LAURA SULLIVAN: Trump had upended decades
of U.S. trade policy, determined to start a fight he felt was his. SUSAN THORNTON: In several meetings, even
in high-level meetings with the president, some foreign leaders offered. They said, we want to help with China, we
want to do this together with you. But he seemed to think that this was his fight
alone and that he wanted to do it mano a mano. LAURA SULLIVAN: At that point, were you disappointed,
were you frustrated? GARY COHN, Former Presidential Economic Adviser:
If you adamantly believe that something doesn’t make sense, you are personally disappointed,
but, ultimately, it’s not your decision to make. LAURA SULLIVAN: Within a month, Cohn would
leave the White House. The nationalists had won. WOMAN: President Trump turning tough trade
talk into action. LESTER HOLT, NBC: New tariffs announced by
the Trump administration on $50 billion worth of Chinese exports. WOMAN: China is now punching back with an
equal amount of tariffs on American exports. MAN: President Trump has just slapped tariffs
on another $200 billion of Chinese exports. MAN: Igniting the biggest trade war in economic
history. YAMICHE ALCINDOR: Of course, since those tariffs
were first imposed, the trade war with China has accelerated. But the president’s latest threat to add tariffs
to another $200 billion in Chinese goods caught many off-guard. Some see the president’s warning as his way
of trying to get better leverage and more concessions from China. Administration officials said President Trump’s
announcement came after the Chinese government dug in on some U.S. demands. For further insight into all of this, Laura
Sullivan joins me now. Thanks, Laura, so much for being here. LAURA SULLIVAN: Thank you. YAMICHE ALCINDOR: So, in the documentary,
and in what we know how, the president has said that he’s planning to increase tariffs
on China. He said that the Chinese government had reneged
on some of the policies and promises that they have made. What’s happening there? LAURA SULLIVAN: This is part of a longstanding
message that has come out of the sort of more hawky members of Trump’s China team, that
China has failed to live up to the promises that it’s made for almost 20 years now, almost
two decades now since joining the WTO in 2001. They felt that China has promised to open
its markets, promised to play fair, promised not to steal American technology, promised
to not force companies into technology transfer agreements over and over again, and they have
failed to do that. The Trump administration’s position is that
this — two successive administrations, the Bush administration and Obama, have allowed
China to walk on these issues, and that they are not going to be the ones that do that. There’s a lot of backstory to this, though. I mean, the United States business community
didn’t want the previous administration to take this hard line. And now it’s sort of coming push to shove. The Obama administration did make a deal with
President Xi Jinping of China in 2015 that they would — that cyber-theft wasn’t going
to happen anymore, that it was going to be off the table. Cyber-experts say that that lasted about a
year-and-a-half, and that cyber-hacking is going on. So there is reason to believe that some of
the promises have not been lived up to. YAMICHE ALCINDOR: We saw today how volatile
the markets were. How does that factor into President Trump’s
thinking when we think about trade and China? LAURA SULLIVAN: The markets are absolutely
important to the Trump administration. I mean, it’s a personally important to Trump. I mean, this is — he has talked about this
issue of trade and trade deficits for — especially with China — for almost 20 years. But the stock market to him reflects that
idea, the health of the country. So, he — there’s two sides to this coin,
because, on the one hand, it’s emboldened Trump and the Trump administration to be able
to take on China with additional tariffs, because the economy is in a good place and
the stock market has been high. However, if this volatility continues, it’s
something that’s definitely one of the few things that will hold the administration back. YAMICHE ALCINDOR: In the documentary, you
detail how China has used international and domestic tactics to try to grow its economy
and compete with the United States. Talk a little bit about what they have been
doing, but also the reasoning that their leaders use. LAURA SULLIVAN: So, the Chinese have something
called the China model. It’s the — the way that their economy is
based, they can marshal the entire forces of their economic engine to drive forward
in whatever the Chinese leadership wants to do. If they want to move their country toward
the high-tech sector, artificial intelligence, semiconductors, basically America’s Holy Grail,
they can do that swiftly and fiercely. They can — they have plans for 10, 20, 50
years out. And they are moving their country forward. They have done this. They have been incredibly successful. They have moved 300 million people out of
poverty. No country in the history of the world has
been able to you that in 20 years. At the same time, a number of people in the
United States feel like the United States is falling behind. YAMICHE ALCINDOR: In the documentary, you
say that the nationalists won. What impact is that going to have on the future
of the Trump administration? And how does that dovetail with the president’s
long-held beliefs on trade and China? LAURA SULLIVAN: These fights in the Trump
administration were some of the most vicious, nasty fights. That’s how people in the Trump administration
describe them. The reason they were so nasty is because what
they were fighting about was such a passionate issue to these Trump administration advisers. They were really deciding whether or not tariffs
would destroy the economy of the United States or whether tariffs would have the ability
to bring a country to heel that will challenge the United States as the next superpower. When the nationalists won and the globalists
lost — and the globalists have now for the most part all left the White House — there
is now no counterbalancing force inside the White House to hold back any idea that tariffs
might be dangerous to the economy. At this point, only the nationalist agenda
is on the table. And there is very little suggesting to anybody
inside the Trump administration that this could be dangerous. YAMICHE ALCINDOR: Well, thank you so much,
Laura Sullivan. LAURA SULLIVAN: Thanks so much for having
me. JUDY WOODRUFF: And this “Frontline” and NPR
joint investigation, “Trump’s Trade War,” will air tonight on PBS, and can be watched
online at PBS.org/Frontline.

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