The Washington elites still don’t quite understand the art of the deal. President Donald Trump met recently with Chinese President Xi Jinping regarding trade tariffs. Right now there’s a 10 percent tariff on $200 billion worth of products. That was set to rise to 25 percent come Jan. 1. The Chinese, in turn, have levied tariffs on $110 billion in U.S. goods. The two leaders agreed to a 90-day truce while they negotiate terms. The mainstream media claim Trump blinked. Did he?
The “Trump blinked” rhetoric demonstrates a fundamental misunderstanding of how this president operates. Most U.S. presidents have gone into these negotiations with exactly what they want. They generally come out with about half. President Trump goes into these negotiations with about 400 percent of what he wants and comes out with 200 percent. This latest “truce” is a great example.
What did we get at the end of the day? The 10 percent tariff on Chinese goods stays intact. In return, the Chinese have promised to substantially increase the amount of agricultural, energy, and industrial products they buy from the United States thus reducing our trade imbalance. The purchasing of more agricultural products from our farmers will begin immediately. China will also designate Fentanyl as a controlled substance, which will aid us in our war on opioids. But because Trump didn’t go forward with the 25 percent tariffs, he blinked.
Too many in Washington want to go along to get along. President Trump wants to actually fix the trade problem. The dreaded global economic crisis the left-wing media were trumpeting that was supposed to happen is now being debated in the markets and will most likely never materialize. Just like the so-called collapse of the soybean market over Trump’s spat with the EU never materialized. In fact, soybean futures for January jumped 1.1 percent on news of the tariff truce with China.
President Trump is not finished yet. One of the real goals of the tariffs is to stop China from stealing intellectual property. The irony is that two of the most vocal anti-Trump groups – Hollywood and Silicon Valley – would be the primary beneficiaries. The president hopes to recoup $50 billion in lost corporate earnings for U.S. corporations. Microsoft has given up on charging for Windows in China. According to former Microsoft CEO Steve Ballmer, when he left the company a few years ago an estimated 90 percent of Chinese companies were using Windows. Guess how many were actually paying for it. Only 1 percent, according to Ballmer. That’s some major theft. Even though Microsoft has given up on getting their money out of the Chinese, Trump has not.
So, like the auto tariffs on automobiles coming out of the EU were used as leverage for soybeans and other products, so are the tariffs on Chinese goods. People complain that their cheap Chinese goods in Walmart might go up in price. Personally, I think it’s despicable that we buy so much from the most brutal communist regime the world has ever known. If we never bought another item from China it would suit me just fine. But this isn’t about ending trade with China. It’s about stopping them from stealing the labor of some of our most brilliant minds.
President Trump is fighting for the songwriters and the movie producers, as well as those who write software programs. He’s fighting for America’s creative community. In the meantime, they almost unanimously bash him. Still, Trump is undeterred. He’s a businessman, not a politician. He’s not negotiating to get along. He’s negotiating to win.
Phil Valentine is a nationally syndicated talk radio host. Find him at philvalentine.com.