Trump's Chinese Trap That Ukraine Should Know Of

After Donald Trump's victory in the US election, pessimistic expectations prevail in Beijing: Trump and his supporters are seen as dangerous because they have abandoned Barack Obama's moderate strategy in this area, instead choosing a tough anti-China stance as the core of their foreign policy. Trump's first term is remembered for the head-on trade war with China, but it was only the tip of the iceberg. It was in the late 2010s that the United States introduced mechanisms for screening Chinese investments, made it impossible for the Chinese to take over American high-tech companies and imposed the first sanctions against Chinese tech giants. In the security sphere, a new doctrine, the Indo-Pacific strategy, was formalized.

Although from the outside, these actions of the first Trump administration looked like a coherent, well-thought-out and far-reaching anti-China policy, a closer look revealed a series of spontaneous jerks and rollbacks, combined with occasional gains and local losses that came and went in the sea of chaos that reigned in Washington. At the beginning of his term, Trump had neither a clear plan for dealing with the threats that China regularly posed to global leadership and security of the United States, nor a team that could act professionally in this area.

Reflecting on the evolution of Trump's approach to confronting the PRC is also useful for Ukraine, whose policy toward the new administration is currently a black box. Understanding its China vector in 2017–2020 makes it possible to identify the general outlines of Trump's foreign policy trajectory, which is generated from scratch, transformed into a complete concept and impetus for action not only by his entourage but also by the American bureaucratic machine as a whole.

The Trump administration's central achievement in China is considered to be the negotiation and signing of the US-China Economic and Trade Agreement, or rather, its part called Phase 1. Trump promised to get trade concessions from China and abandon unfair practices during the 2016 election campaign. However, the first part of the agreement was signed only in January 2020, after three years of his presidency.

The revision of trade relations with the PRC was determined by objective necessity. Bilateral trade had long seen a deficit in favor of China, and its penetration and influence on many areas of American social and economic life had become clearly visible. Meanwhile, Trump's fixation on the deal with China was also subjective and psychological: the unconscious desire of a businessman to sell something to a solvent client, the desire of an ambitious person to demonstrate victories in general and the desire to destroy the legacy of the Obama administration, which tried (unsuccessfully) to develop relations with Beijing, involving it in international relations on American rules and binding it with obligations. Obama's policy was probably interpreted in Beijing as a weakness, as China responded by penetrating deeper into American internal affairs.

Washington's position during negotiations with Beijing in 2018–2019 formally looked stronger, as the trade disparity allowed the United States to impose conditions that Beijing had limited ability to respond to. The Americans had the right of the first move, which they used in 2018, conducting three rounds of tariff increases on Chinese imports. Each time, Beijing tried to hold the line and retaliate with tariff restrictions, painfully targeting the welfare of those Americans who had elected Trump. However, the strong American position had its own vulnerabilities, both internal and external, which ultimately prevented the United States from achieving greater results.

From within, the American line was undermined by squabbles between rival camps. On the one hand, Trump appointed his business friends with powerful connections in business circles and on Wall Street to positions responsible for negotiations. The camp of these entrepreneurs (formed around Secretary of the Treasury Steven Mnuchin and Secretary of Commerce Wilbur Ross) was in opposition to the idea of a hardline deal with China, being sensitive to the discontent of Chinese partners. At the opposite pole, there was a camp of ideologically charged hawks (Stephen Bannon, John Bolton, Mike Pompeo, etc.) who saw Trump as a means of awakening America from its hibernation to focus its full potential on the Chinese threat.

Although Trump intuitively sensed the growing danger from China, the pro-Chinese business lobby had a far greater influence on shaping his current position than the hawks. His billionaire friends not only knew how to speak the language of material costs and benefits that he understood, but also had a fast and effective channel of communication with him through family members and chiefs of staff. However, as negotiators with China, the party of businessmen proved to be weak and peaceful: numerous assets and contracts with Chinese partners deprived it of leverage to pressure the other side for concessions. After failing to show any significant results in the negotiations in 2017, the group provoked Trump's direct intervention in the process, which, at the hawks' suggestion, began to directly threaten the Chinese with significant tariffs on large portions of Chinese goods in 2018.

Trump's declared friendship with Xi Jinping also added to the destructiveness. According to insiders, it took the form of skillful flattery, accepting which Trump repeatedly gave instructions to make concessions to Xi in response to his personal appeals. The passage of time also reduced Trump's propensity for quality negotiations with his “friend” Xi. With the 2020 presidential election looming on the horizon, he needed any deal he could get.

Externally, the Trump administration periodically faced situational opportunities that it was not able to effectively integrate into its negotiating position. The student protests in Hong Kong against the new security laws of 2019, which were suppressed by the Chinese authorities, were openly ignored by Trump. He sabotaged the Hong Kong Human Rights and Democracy bill, passed by Congress without his support, and when signing it, he said: “We have to stand with Hong Kong, but I also stand with President Xi. He is my friend.” For the same reason, the United States preferred not to lay the blame on China for the COVID-19 pandemic that broke out in 2020. Trump's demonstrative insensitivity to democracy and human rights has made it difficult for him to communicate with allies in various formats to jointly counter China's ambitions. The tough deterrence planned as part of the Indo-Pacific Strategy ran into the unwillingness of the scandalized president to find the resources to finance it.

As a result, signatures on the agreement with China turned out to be more important than its quality. Formally, it allowed Trump to declare that he had fulfilled his election promise. In fact, the agreement obliged China to purchase additional goods from the United States for $200 billion, which it fulfilled by 60% over the next two years. In exchange for some tariff reductions, China also promised to strengthen the protection of intellectual property rights and lift some restrictions on the activities of American firms on its territory. However, the mechanism for enforcing the provisions of the agreement, as well as initiating negotiations on Phase 2, was rather weak: the restoration of the previously established tariffs. Under the Biden administration, China's leadership decided to get used to the higher rates rather than risk resuming negotiations with the Americans. At the end of 2023, the trade deficit between the US and the PRC decreased to $279 billion (in favor of the latter) from $418 billion in 2018. A significant portion of trade flows was redirected via bypass routes through Vietnam and Mexico.

The lesson learned by China from the trade war with Trump was the need to reduce its critical trade dependence on the United States. In 2020, Xi Jinping launched a “dual circulation economy” policy aimed at shifting China to a more stable economic growth model that relies on domestic demand rather than foreign trade. Its results are not yet convincing: China's economic growth is still highly dependent on public investment and net exports. However, Beijing may also have a reason for optimism: the destructive forces generated by Trump's administration and directed outward have a high entropy.

During Trump's new term, it is not so much the preventive measures taken by Beijing as the chaotic and eccentric nature of the politician himself that will prevent the United States from constructing a systemic anti-Chinese strategy. History seems to be repeating itself: the business lobby led by Elon Musk, whose motives are to cut taxes, reduce government regulation and promote their own business interests, will have a decisive influence on the new administration's policies. China will be happy to deal with such people. Savings on a professional foreign policy, a vulnerable negotiating position and a tendency to use personal agreements rather than institutions are unlikely to allow the Trump team to impose unfavorable trade obligations on the Chinese. Negotiations are the best scenario for Beijing: it opens up opportunities to play for time. Although a new trade agreement with the PRC is possible, it will ultimately be decorative again. But the damage caused by Trump's purges to the United States itself will likely be disproportionately greater.