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November 22, 2024 - 4:00pm
As Trump prepares to return to the White House, the President-elect’s cabinet nominees may be unified in their support for him. But they are not so united on how to handle trade, especially with China. These tensions speak to the complexities of the geopolitical challenges facing the United States, but they could also be a source of conflict within the administration in the months ahead.
Trump’s national security picks so far have tended to be hawkish on China. Senator Marco Rubio, the nominated secretary of state, and Congressman Mike Waltz, Trump’s new nominee for national security advisor, have both expressed warnings that the US is in a cold war with China. Meanwhile, one of the top contenders for Treasury, the Trump transition co-chair Howard Lutnick, has now been nominated secretary of commerce after defending Trump’s proposed tariffs in media appearances and campaign stops. In addition, longtime critic of the “free trade” agenda, Robert Lighthizer, remains in contention for some high-level position in his second administration.
Central to their hawkish worldview on China is tariffs, which Trump has called the “most beautiful word in the dictionary”. The President-elect sees this as a major lever of economic policy for a second term and is building an economic team around that vision. Yet nothing is simple with Trump. Despite the trade hawks flocking to his incoming administration, perhaps one of his closest allies also has major investments in China. As the head of Tesla, Elon Musk presides over a global manufacturing network, and Shanghai hosts a colossal Tesla gigafactory. Tesla told the US government in July 2023 that it did not ship vehicles from China into the US market, but the electric-car maker does have global supply chains, which a tariff war could interfere with. With his libertarian leanings, Musk might also have some reservations about tariffs in general. On X, Musk praised as a “good move” the slashing of import taxes by Argentinian president Javier Milei.
Then there is Vivek Ramaswamy — Musk’s partner in leading the new Department of Government Efficiency (DOGE) — whose position points to a potential divide (or at least tension) even within China hawks. While Ramaswamy has defended tariffs on goods from China, he has laid out a “national libertarian” model that also calls for expanding trade with allies, which might be at odds with an agenda of across-the-board tariffs. Supporters of universal tariffs call for rebuilding the US manufacturing base, but high global tariffs could also heighten tensions with potential allies that the United States might need in its strategic rivalry with China.
The heterogeneity of Trump’s cabinet has caused some observers to speculate that the incoming president might be giving himself considerable room to manoeuvre on both trade and China policy. Vicious infighting between various internal factions consumed much of Trump’s first term, and even some populists are wary about repeating that dynamic. To some extent, though, this heterogeneity is understandable, as leaning too far in any single direction could imperil Trump’s second term. While restoring the American industrial infrastructure increasingly seems like an essential national security priority, a trade disruption that is too sharp could send the economy into a tailspin and also cause cascading crises internationally.
Trump sees politics more as hammering out a Manhattan real-estate deal than as some grand contest of ideas. Sometimes, you put on the hard sell. Sometimes, you put up an adversarial façade as a way of getting people to the negotiating table. Eschewing ideology, the President-elect prefers a politics of interest and instinct — and unpredictability. Despite his brand of political conflict, Trump also seems averse to economic turmoil, which a sudden, complete break with China could cause. His ultimate trade policy toward China, then, might focus more on a rebalancing rather than a total severing.
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SubscribeThe last thing I want to see an administration be is a one thought group think.
Different opinions around the table will mean better policy.
Absolutely. Since when did it become accepted wisdom that everyone within a political party or administration should be goose stepping to the same marching orders? The best policy happens when people with competing views sit down together and come up with a reasonable compromise. This isn’t rocket surgery.
In fact, I think you can argue the entire populist movement has emerged because political leaders across all parties share the same beliefs about all the major issues – immigration, net zero, covid policy. This myopic vision is responsible for many of the problems facing the west today.
This is what really bugs me about opposition to some of the Trump admin picks. Tulsi Gabbard is a Putin puppet because she thinks maybe – just maybe – the U.S. approach to Ukraine is partially responsible for the conflict there. The only sensible diplomatic strategy is to relentlessly trash talk our enemies in public. You don’t need to agree with any of this, but the best policy happens when all perspectives are considered.
It matches reality better. I’ve been having a email discussion with the pro life groups after the red deer agm. I am pro life but I’m also not willing to make people decisions for them so suggested some goals which would engender people being able to make the decisions they seem to be advocating for. But it seems they would rather use the force of government…
I guess it means I have achieved the age of pragmatism.
Wise words. Slavish devotion to unrestricted free trade dogma was how we got here in the first place. The lack of any dissenting viewpoints constituted a huge blind spot that led to unnecessary blunders and gave opportunities for geopolitical opponents to exploit. We’re already paying the price for decades of monolithic, ideological policy. In correcting those mistakes and changing policy, we shouldn’t simply exchange one rigid, inflexible dogma for another.
I will disagree on one point. I do think that the end goal should be a total decoupling from China, whatever Musk may think of it. The CCP have goals, interests, policies, and a style of government that are unacceptable for most Americans. There is a real possibility of direct warfare which would necessarily imply a sharp break and have serious consequences for both sides, including potentially the loss of billions of investment dollars on both sides when, during conflict, the other side’s assets are quite likely to be seized and nationalized. Investing more dollars into China at this point is frankly, pretty stupid. It’s equally stupid for their side who are investing here, but such is human greed. As for the stuff that’s already been built, well, that’s unfortunate but it’s also what China hawks have been warning us about since even before 2000. History has proven them right and the optimistic globalists wrong. Denial is not helpful.
The reality is he and all the other billionaires who dumped investment dollars into a totalitarian state that has the legal authority to seize private assets and intellectual property took a great risk. It may not have seemed like a great risk at that time but the risk WAS there. Risk is a critical part of business. It is accounted for in interest rates, stock prices, and every financial asset. It is a critical part of a truly free and competitive financial market. As such, neither businesses nor business owners should not be shielded from the consequences of risk by government policy. If they lose the entirety of their investments in production capacity, factories, and whatever else in China, that’s unfortunate, but it’s a part of business. They made a mistake. They shouldn’t be able to manipulate the government to avoid paying for it.
That isn’t to say we should unilaterally move to immediately terminate all ties. There exists a possibility, however remote, that Chairman Xi will lose power and a more sensible government with a less confrontational approach will replace him. Further, an immediate break would create unnecessary economic chaos and short term chaos. Our policy should be on discouraging or prohibiting any further investment in China by American firms while adopting policies that encourage reshoring or at least shifting supply chains for critical goods, and eventually all goods consumed by Americans, away from a potentially hostile state. Given how much our economies have intertwined, this is a monumental task that must be taken one step at a time. It will take time, many years or even decades, but if we are to reach the goal, the difficult first steps must be taken now. One can only hope that we’re fortunate enough to avoid direct warfare for long enough to implement such a gradual withdrawal.
This is how multipolar geopolitics works. There are allies, enemies, spheres of influence, and economic competition. Our economic policy in this age must necessarily include a political dimension and take political situations into account. I have little doubt this will greatly displease the financial and capital class, but frankly, they need the reality check. I can’t bring myself to have much sympathy for wealthy aristocrats who put the welfare of foreigners and their own fortunes over the welfare of their countrymen and the security of their homeland. I have, at least, that much of a sense of patriotism. Frankly, it’s time to tell these people to pound sand. They need to be told in no uncertain terms that now is the time to either get with the program on our side or take your chances with Chairman Xi because the world of 2015 is gone and not coming back. Better learn to live in the new one.