Hayward: Trump’s 2016 Campaign Promise Scorecard on China

President Donald Trump talked about China a great deal during his 2016 campaign. His first term featured some very high-profile economic, security, and diplomatic conflicts with Communist China, culminating in the biggest event of 2020, the Wuhan coronavirus pandemic.

How well does his first-term scorecard on China line up with his 2016 campaign promises?

Trump’s Campaign Promises on China

Trump took some very strong positions against China during the 2016 presidential race.

“We can’t continue to allow China to rape our country, and that’s what we’re doing,” he said at a campaign rally in May 2016. “We’re going to turn it around, and we have the cards, don’t forget it. We have a lot of power with China.”

In a June 2016 policy speech, Trump promised to tear up bad trade deals that paid off for “the financial elite” while leaving “millions of our workers with nothing but poverty and heartache.” Trade deals with China were his paramount examples of bad deals. He criticized his opponent, Hillary Clinton, for supporting the Trans-Pacific Partnership (TPP), vowed to label China a currency manipulator, and said he would impose tariffs on Chinese goods.

Trump stressed these positions during his address to the 2016 Republican National Convention. He promised to “make America rich again” by getting out of “bad trade deals,” halt China’s “outrageous theft of intellectual property,” its “devastating currency manipulation,” and its “illegal dumping” of goods.

Trump’s RNC address and 2016 campaign platform slammed former President Bill Clinton for allowing China to join the World Trade Organization (WTO).

“Since China joined the WTO, Americans have witnessed the closure of more than 50,000 factories and the loss of tens of millions of jobs. It was not a good deal for America then, and it’s a bad deal now. It is a typical example of how politicians in Washington have failed our country,” his campaign said.

“Under the Trump administration trade will flourish,” the Trump 2016 campaign predicted. “However, for free trade to bring prosperity to America, it must also be fair trade. Our goal is not protectionism but accountability. America fully opened its markets to China but China has not reciprocated. Its Great Wall of Protectionism uses unlawful tariff and non-tariff barriers to keep American companies out of China and to tilt the playing field in their favor.” 

Trump’s campaign promised to “bring China to the bargaining table by immediately declaring it a currency manipulator,” protect American intellectual property from theft by China, reclaim American manufacturing jobs from China, and lower U.S. corporate tax rates to keep American companies from relocating overseas.

Trump also promised in 2016 to reduce the U.S. national debt and deficit “so China cannot use financial blackmail against us” and bolster the American military presence in the East and South China Seas to “discourage Chinese adventurism.”

Trump often spoke of “rebuilding” the U.S. military to counter China and other malefactors during his 2016 campaign. He spoke of the military as being a “disaster” after eight years of President Barack Obama and Vice President Joe Biden.

The Trade War with China

President Trump’s first term was unquestionably more confrontational with China than any of his predecessors in the modern era, so broadly speaking, his promise to get tougher with China was clearly matched by action. Trump stunned the pundit class by launching the trade war with China and sticking with it despite media predictions it could only end badly for the United States.

In 2020, the media generally insists Trump lost that trade war with China. CNN argued on Sunday that Trump “failed” to achieve any of his major objectives:

Trump vowed to cut the US trade deficit, but instead it’s reached historic highs. He wanted China to buy more American products, but that hasn’t happened as much as Washington would like. And he’s made almost no progress on big structural issues that American companies care most about.

Despite Trump’s pledge to narrow America’s trade deficit by slapping heavy tariffs on Chinese goods, the gap by which imports exceeded exports in August widened to more than $67 billion, its highest monthly tally in 14 years. The deficit with China alone fell about 7% from July but was still about $26 billion, according to the US Census Bureau.

CNN took all of China’s economic reports at face value to judge that Beijing “found relative economic success this year,” with both imports and exports “surging as its economy reopens” after the pandemic. 

China’s reported trade surplus with the U.S. reached $31 billion in September, while it only purchased about half of the goods it agreed to buy in a temporary deal from early 2020. However, according to the U.S. Census Bureau, the trade deficit with China fell to $29.78 billion in September from $31.74 billion a year ago, reflecting a 13 percent decline in Chinese imports for the year. There has been some movement in the direction Trump desired, and it will be interesting to see if that movement strengthens after pandemic recovery.

Fortune quoted analysts who said pledges made by China in the “Phase One” trade deal were never realistic, although they suggested the very high target numbers may have prodded China to buy more U.S. goods than it otherwise would have. Some American industries covered by the deal, especially in the energy sector, could not possibly have produced all the goods China promised to buy.

Bringing American Manufacturing Home

The Wall Street Journal (WSJ) said on Saturday that Trump did not achieve his “central objective of reversing a U.S. decline in manufacturing,” although he did make good on his pledge to slap large tariffs on Chinese goods. The effect of those tariffs on manufacturing jobs is a topic of much debate among analysts, especially after the coronavirus struck.

“The tariffs did succeed in reducing the trade deficit with China in 2019, but the overall U.S. trade imbalance was bigger than ever that year and has continued climbing, soaring to a record $84 billion in August as U.S. importers shifted to cheaper sources of goods from Vietnam, Mexico and other countries. The trade deficit with China also has risen amid the pandemic, and is back to where it was at the start of the Trump administration,” the WSJ wrote.

“Another goal – reshoring of U.S. factory production – hasn’t happened either,” the WSJ added. “Job growth in manufacturing started to slow in July 2018, and manufacturing production peaked in December 2018.” 

The WSJ further cited Federal Reserve figures that showed a bump for employment in industries directly exposed to trade with China due to the trade war tariffs, but a larger loss of jobs caused by higher costs of importing materials from China plus retaliatory tariffs imposed by the Chinese.

Despite what the Fed’s economic models claim, manufacturing employment did grow as the tariffs were applied – manufacturing jobs rose by almost 2 percent in 2018, the best annual gain since 1984, followed by 1.19 percent growth in 2019. In the last year of President Barack Obama’s second term, manufacturing employment grew by only 0.14 percent. 

These critical analyses granted that the coronavirus pandemic was a wild card that made 2020 a difficult year for any long-term strategies. Trump administration officials, notably including Trade Representative Robert Lighthizer, insist trade deals with China are still a work in progress delayed by the pandemic. 

The WSJ pointed to some industry leaders who said their businesses benefited from the tariffs, while others said they suffered. Fortune’s analysts argued that some of the trade restrictions for sensitive industries in the Phase One trade deal were worth having, even if China does not come close to hitting its import targets. Few would argue that President Trump didn’t try to keep his tariff campaign promises, but the benefits he predicted have not fully materialized as Election Day approaches.

“Reshoring,” or restoring the U.S. manufacturing base, was a major goal of President Trump’s policies, and a top example of a process delayed by the coronavirus pandemic, with an uncertain future ahead. There were significant signs of U.S. manufacturing growth in 2019, perhaps the beginning of a time-consuming and expensive reshoring process that would last well into the next presidential term and beyond.

The coronavirus is clearly hindering the U.S. manufacturing base for the moment, while China advertises that it is fully open for business again. It is also possible that suspicion of China after the coronavirus, and mounting unease over human rights violations such as forced labor, will inspire companies to withdraw operations from Chinese soil.

China’s Currency Manipulation

The U.S. Treasury Department designated China a currency manipulator in August 2019, keeping Trump’s campaign promise on that topic. This could be counted as an argument Trump won decisively during his first term, since there is now little question among financial analysts that China was playing with the value of its currency to gain unfair trade advantages, just as Trump alleged.

Trump was not the first critic to accuse China of manipulating its currency or playing foul on trade agreements – even his predecessor Barack Obama complained about it – but the Trump administration was the first to officially designate China a manipulator since 1994.

The Treasury Department announced it would drop the currency manipulator designation of China in January 2020, shortly before the first phase of the trade deal was signed. Treasury said this was done because China made “enforceable commitments to refrain from competitive devaluation” in the trade deal and promised greater transparency when reporting its currency value.

The Trans-Pacific Partnership

President Trump kept his campaign promise to withdraw from the Trans-Pacific Partnership (TPP) in January 2017. The TPP was superseded in 2018 by a significantly different 11-nation agreement called the CPTPP that participants saw as a mixed success.

President Trump certainly kept his promise to improve relations with Taiwan in defiance of China’s efforts to isolate the island. Beijing is furious over American diplomatic and military support for Taiwan, while the Taiwanese government feels relations with the U.S. are stronger than ever.

Rebuilding the American Military to Confront China

Trump’s promise to increase military spending was kept, to the great displeasure of China. The fiscal 2021 budget is the first under Trump that does not include a significant spending increase; instead, the armed forces are being encouraged to modernize, reform, and focus on critical projects for next-generation warfare. 

Under Trump, the U.S. Navy continued its Freedom of Navigation Operations (FONOP) in the South China Sea and Taiwan Strait, despite belligerent complaints from Beijing.

Protecting U.S. Intellectual Property

The success of efforts to combat intellectual property theft is difficult to judge, given the shadowy nature of the enterprise, but the Trump administration has taken action as promised by the president during his 2016 campaign. Major arrests of Chinese agents and collaborators have been made. The Chinese consulate in Houston was identified as a hub of espionage activity and shuttered, and Chinese influence networks in the United States are under unprecedented scrutiny. 

The Trump administration has been especially bold about countering Chinese influence and intellectual property theft on campus, culminating in a stunning report from the Education Department last week about foreign influence on American universities. 

Reducing the National Debt

Of President Trump’s 2016 campaign promises relating to China, the one that most clearly has not been met was his pledge to cut the U.S. government’s budget deficit and reduce the national debt because it gives China too much leverage for “financial blackmail.” The deficit tripled in 2020 to $3.3 trillion thanks to the coronavirus pandemic, but it never got smaller during any year of Trump’s first term. 

Conclusions

Reducing the deficit and national debt is the only campaign promise related to China that President Trump didn’t make a strong effort to fulfill. The success of some of his efforts is hotly debated, especially after the ultimate wild card of the coronavirus pandemic, but he clearly did try to rebalance the trade deficit, bring manufacturing back to U.S. soil, halt Chinese currency manipulation, confront China’s expansionist ambitions, and protect American intellectual property.