President Donald Trump bet the house that getting a sweetheart trade deal with the Chinese government would boost the American economy and his electoral odds before the election. Now, with that election less than 100 days away, some members of his inner circle are pushing him to make a new bet: that he’ll win if he blows it all up.
Four people with knowledge of the situation tell The Daily Beast that in the past three weeks, an internal campaign has intensified within the Trump administration to convince the president to nuke the China trade deal—an international agreement that Trump has considered a crowning, legacy-defining process of his first term in office.
These efforts in the administration have been spearheaded by a variety of political aides, economic and policy advisers, and President Trump’s perennial China hawks, including White House trade adviser Peter Navarro. Some of these officials have taken to showing Trump printed data, pictures, and charts that they claim demonstrate how China still is not buying American goods at a level high enough to satisfy the president’s aims.
But as part of their pitch, these senior officials have also increasingly insisted to Trump that he and the United States are still being “ripped off” by the Chinese government on trade—much in the same way, they argue, that Trump’s predecessors, Barack Obama and George W. Bush, were taken advantage of. The reference to the two prior presidents is strategic, as Trump regularly rips both men as “weak” and “stupid” on China matters. The thinking goes that he will recoil at being compared to them.
Currently, trade talks between the Chinese and U.S. governments have hit a perilous patch, in large part due to the global coronavirus pandemic. The “Phase Two” stage of negotiations, meant to build off of the initial deal, have stalled, with Trump telling CBS News last month that he was “not interested right now in talking to China [about Phase Two].”
In the recent past, the president had been so enthusiastic about getting a deal jammed through before the 2020 election that he was willing to overlook—and by some accounts, actually encourage—some of Beijing’s grossest abuses of human rights. And it wasn’t long ago that President Trump and his team were actively campaigning for re-election in part on his policies, trade war, and phased deal with the Chinese, and attempting to make China the biggest policy liability for Team Biden.
But according to the four sources, the advisers have also recently told Trump that—given the trade realities, the coronavirus pandemic, and other political disputes and diplomatic tensions with Beijing—it would be bold and necessary for the president to call things off with the Chinese government, even if it threatens to throttle stock markets.
Appearing tough against a major adversary may have political upside. But it would also risk the self-inflicted detonation of one of Trump’s biggest policy initiatives, one that has consumed nearly four years of the president’s political capital, and one that grew out of a trade war that’s taken its toll on American farmers and businesses.
So far, according to three of the knowledgeable sources, the president has seemed receptive to the idea of playing hardball and walking away, and has told confidants that he’s strongly considering it. One of these individuals said Trump privately mentioned last month that it could “teach [the Chinese] a lesson,” if he were to go through with deep-sixing negotiations. However, the sources noted that the president did not tip his hand to them on which way he’d end up going, between now and the November election, and that he was still hearing a lot from pro-deal forces in his administration.
“There was so much increasing hostility toward China right now in the White House and around the country; I do believe there should be a reconsideration because they haven’t held up their end of the bargain,” said Stephen Moore, a longtime conservative economist who informally counsels Trump and other top officials. “I’m not sure what the best path forward is. I would certainly say that now is a time for isolating China… Whether or not it’s time to rethink the China trade deal, I don’t know. I think there’s arguments on both sides… I can see the arguments of being punitive toward China…[And] I was very pleased with the trade deal with China. But the coronavirus has been a game changer… They still haven’t really acknowledged any wrongdoing.”
Two individuals, both of whom have informally advised the administration on the deal in the past, said they had, for months, pushed senior officials to implement stricter enforcement mechanisms into the phase one pact before its signing. Since then, those individuals and a cohort of other traditionally hawkish China policy experts have privately called out the White House’s inability not only to get Beijing to live up to its purchasing commitments but also to leverage the deal to stop the country from engaging in malign practices such as intellectual property theft.
Others in the China think-tank world have called out the Trump administration for the crumbling deal.
“The phase one trade deal is the only part of the U.S.-China relationship that hasn’t come under pressure the last six months. The deal was supposed to force China to buy more goods and to compete fairly. But the purchases don’t seem to have matched the promises,” said Zach Cooper, a research fellow at the American Enterprise Institute, a right-of-center think tank in Washington. “FBI Director Wray and Attorney General Barr have said that Chinese theft has increased. How long can the phase one deal survive if it hasn’t delivered the fair economic relationship that the Trump administration sought”?
With increasing frustration over the belief that Beijing has failed to uphold its commitments, several Republican China hawks have held informal talks with the Biden campaign about the candidate’s plans for addressing the trade gap between the two countries. The Daily Beast previously reported that Team Biden has recently launched a new effort to attack Trump on the trade deal he made with Chinese President Xi Jinping and connect with those Republicans who, until recently, were in Trump’s greater orbit.
China experts say they are expecting the release of a new set of trade numbers, including export and sale data, in the coming days that could determine if Trump decides to move to pull out of the deal.
In the upper ranks of Trumpworld the president is hardly alone in venting his frustrations about China and the current deal. Some do so at scripted, high-profile speaking engagements, or while on live television.
In a speech delivered late last month at the Richard Nixon Presidential Library, U.S. Secretary of State Mike Pompeo charged that the regime in China interprets their trade agreements as mere recommendations.
“We imagined engagement with China would produce a future with bright promises of comity and cooperation,” said Pompeo. “But today we’re all still wearing masks and watching the pandemic’s body count rise because the [Chinese Communist Party] failed in its promises to the world.”
In late June, Navarro even went on Fox News and said that the U.S.-China trade deal was “over.” This one comment on cable news resulted in a brief nosedive in the markets, causing the White House to quickly spring into damage control and clean-up mode.
On that day in June, when asked if what Navarro had said on-air was true, Trump’s top White House economic adviser Larry Kudlow—who has at times found himself at odds with Navarro in heated, and sometimes loud and profane, policy squabbles within the Trump administration—messaged The Daily Beast close to midnight a simple, emphatic, one-word comment: