Trump: For "the first time," China really wants to make a deal

Did China finally blink in Donald Trump’s trade war? Trump himself seems to think so. At the G-7 summit, Trump told reporters that a statement earlier in the day from a top official in Beijing showed that China had finally expressed a real interest in redefining the trade relationship between the world’s top two economies. It’s “the first time” that Trump sees China acting in good faith, he said:


After rapid-fire escalations in tariffs by both sides, China’s vice premiere called for “calm.” Liu He also declared Beijing’s willingness to conclude a trade agreement and called for talks to begin immediately:

“We are willing to resolve the issue through consultations and cooperation in a calm attitude and resolutely oppose the escalation of the trade war,” Liu, who is President Xi Jinping’s top economic adviser, said, according to a government transcript.

“We believe that the escalation of the trade war is not beneficial for China, the United States, nor to the interests of the people of the world,” he added.

U.S. companies are especially welcome in China, and will be treated well, Liu said.

“We welcome enterprises from all over the world, including the United States, to invest and operate in China,” he added.

“We will continue to create a good investment environment, protect intellectual property rights, promote the development of smart intelligent industries with our market open, resolutely oppose technological blockades and protectionism, and strive to protect the completeness of the supply chain.”

Trump also took to Twitter to express his happiness with that statement. He praised Xi Jinping as a “great leader” as a measure of his satisfaction:

The reference to the supply chain is particularly telling. Trump threatened to order US companies out of China last week, presumably under authority granted by the International Emergency Economic Powers Act (IEEPA). Trump would have to declare a national emergency that would involve much more than China and would almost certainly get challenged immediately. The IEEPA is intended for truly national emergencies, and as Jazz wrote yesterday, trade imbalance with China doesn’t — or at least shouldn’t — qualify.

On the other hand, Andrew McCarthy wrote yesterday, Trump might be able to make it stick, thanks to a lot of discussion in Congress over the threats from China:

Now sure, technically, the president does not have the power to direct American companies to consider alternatives to doing business in China. But so what? The president absolutely has the authority to make doing business in China practically impossible, such that corporate management would be nuts not to consider alternatives.

Moreover, to repeat, IEEPA explicitly grants the president the power to “prohibit . . . any . . . importation . . . of  . . . or transactions involving, any property in which any foreign country or a national thereof has any interest.” I don’t see why that would not cover fentanyl deliveries from outside the United States.

Do we have a national emergency regarding China? Currently, none is listed among the dozens of emergencies declared over the last century, many of which are still pending. But it is certainly conceivable that Trump could conclude there is one. There is an extensive record in congressional hearings and government-agency reports about China’s intellectual-property theft, its prodigious hacking operations, its menacing military operations and build-up, and its aggressions against U.S. allies and interests — most recently in Hong Kong, where, the Chamber of Commerce says, more than 1,200 American firms do business.


And it might not be the worst idea Trump ever had either, McCarthy concludes:

My essential point, though, is that the robust constitutional safeguards from government interference that protect American businesses in the United States are not globally operative. Once you get beyond our shores, it’s a jungle out there. Yes, there are international standards, and, in the developed world at least, they are generally honored. It is a brute fact, though, that corporate America relies on the influence and might of the United States government in order to do international business profitably.

That should be handled by Congress, McCarthy writes, but they punted that authority to the presidency in 1977 with the IEEPA. D’oh! Until now, no president has thought to use that authority to act unilaterally to fight a trade war. Perhaps this is yet another lesson in why one co-equal branch of government in particular should not cede their authority so blithely just to avoid taking tough votes.

At any rate, Liu’s reference to the “supply chain” suggests that Xi is taking the IEEPA option seriously. If Trump disrupts those supply chains and forces US companies to get their supplies elsewhere, they may never come back. The cost involved in moving supply chains is enormous, and US companies might not be so fond of Xi and China’s business practices as to incur them twice. Losing that business would create a large economic shortfall in China’s economy, the kind that could destabilize Xi.

Rather than let a trade war get that far, Liu and Xi would probably prefer to offer Trump some concessions in order to end the risk. It might have been a bluff, but it also might be working.


Once this gets settled, however, Congress needs to take another look at the IEEPA as well as the National Emergencies Act, two 1970s-era mistakes that all but created an imperial presidency. Rather than punting its responsibilities and partying on the taxpayers’ dime, Congress needs to do the work and take the tough votes demanded of them by the Constitution.

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