Politics

Trump Holds All the Cards at the Summit with Xi

Showdown between leader of the free world and leader of the largest communist dictatorship is set for South Florida

“We have the cards. They don’t have the cards. We have the cards,” Donald Trump told Savannah Guthrie on NBC’s “Today” show back in April of 2011, when she questioned the assertion of the then-private businessman that if the United States had the right messenger, China would stop devaluing its currency.

Now President Trump is about to come face-to-face with Chinese President Xi Jinping, the leader of the largest communist dictatorship in the world, this weekend at Mar-a-Lago in Palm Beach, Florida. What will he do?

“My policy is very simple,” Trump also said during that “Today” show appearance, six years ago. “I would tell China, very nicely: ‘Fellas, you’re my friend, I like you very much.’ I would say, ‘We’re going to put a 25 percent tax on all your products coming in.’ And that’s going to do a number of things. Number one, as soon as they believe it’s going to happen, they will behave so nicely, because it would destroy their economy.”

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The 25 percent tax became 45 percent during the presidential campaign. And after he was elected, Trump named a fierce critic of China, Peter Navarro, author of the 2011 book “Death by China: Confronting the Dragon — A Global Call to Action,” as director of the National Trade Council.

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A 45 percent tariff on Chinese goods coming into the United States would send shock waves through China and “create threats to China’s political stability,” according to economic policy analyst Alan Tonelson, who writes the RealityChek blog.

China’s exports to the United States are responsible for 3 percent of the growth of the Chinese economy. If all trade with the United States were to come to a halt, China’s rate of growth would be almost cut in half.

The Chinese government reported a 6.7 percent economic growth rate in 2016, its weakest growth rate in 26 years. That was a big drop-off from the spectacular rate of growth of 9 to 14 percent from 2005 to 2011 and average double-digit growth over the past 30 years.

China lies about its growth rate, most experts agree, to make things look better than they really are. So its real growth rate may be 6 percent now, or 5 percent, in which case a cessation of exports to the United States would kick China’s economic growth rate to 2 percent, lower than it has ever been at any time since the 1970s.

The issue of China, more than any other issue, helped launch Donald Trump’s presidential candidacy.

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President Trump says the United States has remade China — and that China, by driving down its currency and keeping it down, has made it impossible for American companies to compete and has put American companies out of business, all while making Chinese companies rich.

And it’s the issue of China, more than any other issue, that helped launch Donald Trump’s presidential candidacy.

Trump’s appearance on the “Today” show in April of 2011 followed a call to Rush Limbaugh’s radio show the month before, on March 1, 2011. On that phone call to the show, Trump hammered the Obama administration for honoring the Chinese head of state, Hu Jintao, with a state dinner at the White House — a high honor normally reserved for close allies of the United States.

“The fact is that the Chinese are taking advantage of our country. And by the way, the Chinese can’t even believe that they’re getting away with it,” Trump told Limbaugh. He added, “When you think about President Obama, he gives the president of China a five-star dinner at the White House. When somebody rips me off I don’t give them five-star dinners and neither do you, Rush…”

In the months that followed, Trump was all over television and radio, talking about China. And people were listening.

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A look at the U.S. Census numbers on trade shows the rapid escalation in the U.S. trade deficit with China. In 1985, the United States was importing $6 million more from China than it was exporting there. In 2016, the difference was $347 billion — and no one had said much about it before Trump.

Xi won’t be visiting the White House this week, or Washington at all, but will meet with Trump on April 6 and 7 in Florida at Mar-a-Lago, which has become known as the winter White House. Xi won’t be staying at Mar-a-Lago, and he won’t even be staying on the island of Palm Beach. Instead, he’ll be staying a few miles down the road at the Eau Palm Beach resort, formerly the Ritz Carlton, in a small oceanside municipality called Manalapan.

Xi’s trip to the United States to see Trump is “an implicit acknowledgment of China’s relative weakness,” said Alan Tonelson, who also said that China prefers the optics involved when a foreign leader visits China.

“I think it’s fair to say that Donald Trump has got Xi Jinping very worried,” said Tonelson.

A large tariff placed on Chinese products would disrupt the American economy in the short term, noted Tonelson. But probably only in the short term. “The long-term benefits would be very considerable,” he said.

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