Last spring a senior US executive complained to a government official about President Donald Trump’s threat to impose wide-ranging tariffs on imports from China in retaliation for allegedly unfair trade practices.
The executive argued that the Trump administration’s fixation on balanced goods trade between the world’s two largest economies as an end in itself was economically pointless. It ignored America’s service sector surplus with China, while tariffs would disrupt global supply chains and constitute a tax on US companies and their customers.
Without disagreeing, the official had a pointed response: what leverage would the executive use to change Chinese approaches that have frustrated US businesses for decades, from forced technology transfers to state-directed industrial policies? If nothing else, he argued, Mr Trump’s tariff threat had knocked Beijing off balance and forced it to enter a comprehensive trade negotiation with more urgency than at any point since it joined the World Trade Organization in 2001.