We saw perhaps the first crack in President Trump’s trade-war resolve on Sunday, with Trump repeatedly affirming that he was having second thoughts about escalating it with China. The White House quickly sought to clean it up, saying that Trump regretted only not increasing the tariffs even more and also that he “didn’t quite hear the question.”
The contradictory explanations aside, it’s too tempting for Trump’s critics to read this as an early sign of trade-war retreat. Trump just says things sometimes, and it’s possible that he was being flippant. It’s also possible that he’s simply a little dejected about the effect the trade war is having on his most precious reelection asset — the economy — and that he momentarily let it slip.
But that doesn’t mean he’s preparing to throw in the towel. And the whole thing leads to the logical question: How far is Trump willing to go with this, and what are the circumstances under which he would even pull out?
The answer may not please his opponents on this issue.
All signs are that the Chinese are happy to press forward through the 2020 election, hoping that Trump isn’t reelected and that they might get more favorable terms out of a Democratic replacement. They even responded by recently upping their own tariffs, despite Trump pulling back on some extremely punitive ones that were set to begin next week. Even Trump’s trade advisers seem to recognize that the Chinese have time and politics on their side — along with an unforeseen level of resolve.
But if there is one unifying theme of the Trump presidency, it is ego. And although the trade war sinking the economy could doom Trump’s reelection bid, so, too, could an embarrassing retreat from the trade war that Trump has said is so necessary, and that has already carried significant costs. This is the kind of thing he has been pushing for decades. No matter the circumstances, it would be hard for Trump to pull out without getting something tangible in return, or at least something he could try to spin to his base as genuine progress.
One of the peculiarities of Trump’s trade war is his unusual background — specifically, his business history. Trump’s businesses have declared bankruptcy six times. And his past commentary suggests that he may believe a trade-war-related economic slide could simply be necessary or even negotiated away.
That’s precisely how Trump has talked about the national debt, in fact. He told CNBC’s “Squawk Box” in 2016 that “I would borrow knowing that, if the economy crashed, you could make a deal.”
Trump has also recently talked cavalierly about how a brief recession may simply be the price of a much-needed trade war. He seems to regard the longer-term consequences as so perilous that even a real downturn would be acceptable.
It’s possible that all of this is simply bluster; when engaged in trade wars, after all, you need the other side to believe you’re willing to take it further than it’s comfortable with. These are wars of attrition and posturing. To some extent, Trump needs to be Trump when talking about this stuff, otherwise it will never work.
But what if it’s not just posturing? What if Trump is really willing to go to the mat for this, even if it lays waste to the economy? What if a president who seems to regard very little as being holy and who has driven things into the ground before is willing to do that here, too?
There are things that those around Trump can do, such as trying to talk him out of this. To the extent that Congress starts getting nervous, it also could reclaim the tariff authorities it has handed to the presidency in recent decades. (Doing so, of course, would require the GOP Senate’s assent, which would rightly be viewed as a massive rebuke of Trump.) Congress also could seek some concessions as part of the approval process for the USMCA, the new trade deal with Canada and Mexico. So it’s not as though everyone besides Trump is completely powerless.
But the concern about Trump from his opponents has always been what his unwieldiness would mean in the face of crisis. He hasn’t really been confronted with one to this point. That concern generally gets invoked in the context of war or nuclear conflict, but a trade war carries potentially crippling consequences, too. And much like real war, it’s a matter of how much more you’re willing to throw at a failing strategy in hopes of turning it around.
It’s too soon to call this entire exercise a failure — China is paying a significant price, too, after all, and you never know what could ultimately come out of this — but we’re getting closer to a situation in which difficult decisions will have to be made about how far forward to press. It may not be the nuclear button, but there is such thing as mutually assured economic destruction, and it’s worth asking what happens when this truly gets into brinkmanship territory. (A president threatening to prevent U.S. companies from doing business in China isn’t exactly a sign of easing tensions.)
Not that we should expect Trump to tip his hand like he appeared to Sunday. Both Trump’s pride and his reelection are on the line, and that’s a volatile mixture. This is looking as though it may be the genuine test of his leadership that so many Americans feared.