Guest Contribution: “Deal-maker Trump Can’t Deal”

Today, we present a guest post written by Jeffrey Frankel, Harpel Professor at Harvard’s Kennedy School of Government, and formerly a member of the White House Council of Economic Advisers. An earlier version appeared as “Can Trump Deal with North Korea and China?” in Project Syndicate.

Donald Trump has threatened new trade barriers against China while simultaneously depending on Beijing’s help to rein in North Korea’s alarming nuclear weapons program. These two aspects of US policy toward China are at odds.

It feels inappropriate to write a column that treats the two issues on a par. To state the obvious, the stakes are vastly higher in a potential US-North Korean military conflict, especially when it comes to the real danger that nuclear weapons will be used, but even if they are not. But we are forced to consider the Chinese trade issues together with the Korean nuclear issues because the Trump White House does. (Chief strategist Steve Bannon, for example, had the priorities reversed. Just before he was fired he said that the Korea issue was a “side show” compared with the all-important “economic war with China.”)

It is hard to know if Trump sees the two issues as related. Quite likely he imagines that he can use trade threats against China as “bargaining chips” to secure its help in dealing with its troublesome ally. Regardless, he is on the wrong track. The consequences of this mistake could be disastrous.

The usual defense of Trump’s unprecedented approach to governing is that he is “transactional,” a deal-maker who presumably has bargaining skills because he was a businessman. Many speak of this transactional approach as if it is a relevant alternative to the traditional assumption that a president should have some regard for rules and principles, and some respect for international alliances and institutions that are favorable to the long-run interest of the US. They speak of it as a matter of short-term tactics versus long-term strategy. But there is a serious question whether Trump can pull off even short-term tactical successes.

Despite his career in the private sector, the President acts as if he were unfamiliar with some of the most elementary requirements for successful negotiation. One principle of bargaining is to consider the game also from the other player’s viewpoint and to think of outcomes that both sides will have reason to view as favorable compared to the relevant alternatives. Another principle is to build credibility with respect to threats and rewards, so that the other player will perceive a genuine choice of outcomes.

It is probably true that heightened Chinese pressure on Pyongyang up to and including a cut-off of oil supplies, would be the best hope of getting Kim Jung-un to agree to suspend his nuclear program in return for certain security assurances from the US. But how can the US persuade China to take stronger steps?

Despite Trump’s hope that he can use trade with China as a “bargaining chip” to secure its help, erratic threats from the White House are not the way. Chinese leaders in China have already learned that they need not take Trump threats seriously. In December, before taking office, Trump challenged the One China policy. He evidently did not think ahead or take into account that China is more willing to go to war over Taiwan than is the US. On February 9 he had to reverse himself. He got nothing for his “bargaining chip” other than loss of face and a bad precedent for future threats.

Another example of a threat that Trump backed down on was his oft-repeated campaign promise that he would name China a currency-manipulator as soon as he took office. This policy was foolish all along. If Chinese authorities had agreed to US politicians’ demands that they stop intervening in the foreign exchange market during the period 2015-16, the result would have been a more competitive yuan, not a stronger one. But regardless of whether there was any merit to the original charge, which Trump repeated as recently as April 2, 2017, he again lost face with the Chinese by suddenly reversing himself a week later. By now Chinese President Xi Jinping, like most observers, has learned to discount warnings from Trump because they bear such a very low correlation with reality.

The White House is still pursuing aggressive trade policy actions against China. The measures cover a range with respect to their merits. An attempt to block steel imports by means of a national security exemption is farcical — flimsy on legal grounds and bad policy on economic grounds: excluding steel imports, if successful, would raise costs for the rest of US manufacturing. Some other measures have somewhat more merit, such as attempts to enforce intellectual property rights. (On August 18, the White House launched a formal inquiry into whether China is stealing intellectual property.)

But none of these trade initiatives would have much of a positive effect, if any, on the US trade balance, on US real income or employment. And, regardless of the merits, the penny-ante games they are playing on trade policy will not work in favor of enlisting Chinese help in dealing with their neighbor, but more likely will work against it.

In a follow-up column I will address the right way to deal with the North Korea problem.

This post written by Jeffrey Frankel.

7 thoughts on “Guest Contribution: “Deal-maker Trump Can’t Deal”

  1. PeakTrader

    Trump has made substantial progress. The Security Council voted unanimously to strengthen sanctions on North Korea, and China has stated it won’t aid North Korea, if it attacks U.S. territories, e.g. Guam. If North Korea initiates an attack, there’s no doubt Trump will respond. Trump has secured a deterrent.

    China is not on the Western allies side. If it comes to all out war, China will get exactly what it doesn’t want. North Korea possessing nuclear missiles aimed at the U.S. may be unacceptable, like the Cuban Missile Crises, and Trump may not allow any North Korean nuclear missiles to reach the U.S.. Anyway, Trump has inherited many U.S. strategic disadvantages, thanks to the previous Administration.

    1. 2slugbaits

      PeakTrader The unanimous Security Council vote to sanction NK was easy to do, but is probably as toothless as all of the other unanimous Security Council votes. China isn’t NK’s only sponsor…NK also shares a border with Russia and in all likelihood NK got its nuke and missile expertise from Putin via Ukraine. China does not want NK missiles pointed at the US, for what are hopefully obvious reasons. If you’re looking to China to solve the NK problem, then you’re looking in the wrong place.

      As to Trump not allowing any missiles to reach the US, that ship has already sailed. We could very likely shoot down a small missile attack, but NK isn’t going to launch a calculated first strike. The reason NK has nukes is to act as a deterrent against what it perceives as US and ROK aggression. NK saw what happened to Saddam and Gaddifi (pick your preferred spelling) and learned a valuable lesson.

      Deterrence has worked with NK for generations and there’s no evidence it won’t work in the future. And that’s exactly why NK won’t attack Guam…unless of course NK misinterprets Trump’s actions as a prelude to a US attack. As to previous Administrations being responsible for NK, just what exactly would you have suggested they do differently? Invade NK? If you have some bright ideas on how to do that without incurring tens of millions of Korean and Japanese casualties, then you should probably forward your thoughts to the war gamers at the Army’s Concepts Analysis Agency ( I’d be happy to introduce you. Countries are going to do what countries are going to do, and the only proven way to manage that reality is with deterrence. My sense is that Krazy Kim is probably a lot more in touch with is mental faculties than “the Donald” is…and that’s a sad commentary.

      Prof. Frankel is right about Trump not understanding the basics of game theory. There are plenty of game theory mathematicians that work for the Pentagon, maybe Trump ought to invite them over for a simple dummied down Powerpoint presentation.

  2. 2slugbaits

    It’s not just China and North Korea. IMPOTUS Trump is making all kinds of empty threats against Pakistan regarding our efforts in Afghanistan. Apparently Trump can’t be bothered to look at a map and see that Afghanistan is a land locked country and virtually all military logistics flow through the port at Karachi and up through Pakistan. Years ago Obama learned the hard way just how quickly Pakistan can shut down that logistics pipeline.

    And is he really a great negotiator??? He seems to care more about closing a deal…any deal…rather than caring about anything that’s actually in the deal. If it weren’t for bankruptcy protections the guy would be panhandling on busy intersections.

    1. PeakTrader

      2slugbaits, If the U.S. initiated an attack, instead of North Korea, China would protect North Korea. You say China doesn’t want North Korea to point nuclear missiles at the U.S.. Yet, it’s on its way in doing just that. China hasn’t done enough to curb North Korea. Pakistan got its nuclear weapons from China, to counter India. There were nuclear weapons in Cuba and they were taken out. We need to ramp up sanctions on China to reverse North Korea’s nuclear missiles progress. China will also use its influence over Russia and Iran to reverse that progress. Trump’s hard line is the best chance for success.

      1. 2slugbaits

        PeakTrader There is no way that China wants NK to have nukes. China has lots of goals, but what China ultimately wants boils down to stability, which is a tall order with Kim in charge. Given its druthers, China would prefer that NK not have nukes. Unfortunately, the facts on the ground are quite different. NK has nukes and apparently it has an ICBM capability. China also doesn’t want the NK regime to collapse for obvious reasons. And China doesn’t want a unified Korean peninsula…again, for obvious reasons. From China’s perspective the optimal balance is the status quo through deterrence, which is what we’ve had for the past three generations. China has lots of conflicting goals with respect to NK. The Chinese are just muddling through as best they can, which is about all we can or should expect.

        China hasn’t done enough to curb North Korea. Pakistan got its nuclear weapons from China

        Again, NK did not get its nukes from China. NK got its nuke and ballistic missile technology from Putin via Ukraine. You keep pointing to the wrong villain. And if you believe Putin won’t ignore the Security Council resolution and provide Kim with economic aid, then I’ve got some Houston real estate to sell you.

        Trump’s hard line is the best chance for success.

        There’s a difference between obvious bluffing and a tough line. Trump is a well known bluffer, and the Chinese and Russians figured that out a long time ago even if American voters have been a little slow on the uptake. The Chinese have already called Trump’s bluff several times since January. And just a few minutes ago NK called Trump’s bluff (for the second time in three days) with a missile launch that went directly over Japan. The only thing that is restraining NK from launching a missile towards Guam is low confidence in the accuracy of their missiles’ guidance systems. Once NK becomes confident in the accuracy of their missiles, you can bet your bottom dollar that they will launch a test missile barely outside US territorial waters around Guam or Alaska.

        1. PeakTrader

          Here’s what a couple of Democrats in Congress said recently:

          ““President Trump should answer North Korea’s dangerous test with a coherent strategy of direct diplomacy with Pyongyang and increased economic sanctions pressure from China,” said Sen. Ed Markey, the top Democrat on the East Asia Subcommittee of the Senate Foreign Relations Committee.”

          “New York Rep. Gregory Meeks, a Democrat, called for “additional pressure on China” in a holiday appearance on CNN’s “New Day.””

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