It didn’t take long for the new Trump White House to dissolve into acrimony over trade policy. China wasn’t the cause, at least not at first. Steve Bannon, Peter Navarro, and other campaign veterans tried Bannon’s idea of flooding the zone and prepared to pile one trade offensive on top of another. They would protect steel workers with tariffs (although that would piss off European, Japanese, and Canadian allies that export steel) while preparing to pull out of the North American Free Trade Agreement (again pissing off Canada and adding Mexico to the aggrieved) and gearing up to battle China (for which the United States would need as many allies as possible). Navarro prepared charts with a timeline showing all this was possible by the end of the first year.
Except it really wasn’t possible, not if much of the economic team hired by the new president had its way. National Economic Council Director Gary Cohn, a combative, plain-talking former Goldman Sachs president, warned the president that tariffs would tank the stock market. Treasury Secretary Steven Mnuchin, another Goldman Sachs alum who also had been the campaign’s finance chief, cautioned about the impact on the global economy. Both reminded the president of his other priorities, especially passing a huge corporate tax cut, for which the White House needed the votes of Senate Republicans who, unlike the president, were generally free traders. The battle lines were drawn.
Trump had campaigned like a Bannon-style nationalist but had his feet firmly in the camps of both the nationalists and the financiers, whom Bannon and company dubbed the globalists. Yes, Trump wanted action on trade. But no, he didn’t want to risk a stock market plunge or a defeat of his tax bill, which his economists told him would lift growth and let him show up his many critics. A Blue-Collar Trump was at odds with a Wall Street Trump, as would be the case throughout his presidency. His aides jockeyed for power by playing to one side of the president’s personality or the other, never knowing whether a Trump decision would stick.
Navarro, especially, seemed outmatched by his Wall Street foes. Before the inauguration, the Economist magazine predicted the onetime academic would become “one of the world’s most powerful economists” because of his prominent campaign role. The president-elect named him the head of a new, grandly titled National Trade Council.
But after Trump was sworn in, Cohn and company made sure the council was stillborn; no members were ever appointed. Navarro was assigned a staff of one, given a small office across an alley from the White House, and had no scheduled time to see the president. Bannon had to intercede to make sure Navarro wasn’t consigned to a job in the basement of the Commerce Department.
Stewing, Navarro told colleagues in March 2017 that it had been fifty days since he had time with the president. “It’s like fucking ‘Game of Thrones’ around here,” he complained. He was saved from a Red Wedding–like demise when Trump finally noticed his absence. “Where’s my Peter?” the president asked his aides in March, and Navarro was once again included in meetings. Afterward, on March 27, Navarro prepared a memo for the president: “Subject: Future Direction of Trade Policy.”
“It is impossible to get a trade action to your desk for consideration in a timely manner,” Navarro complained. “If this situation is allowed to persist, this Administration is likely to fail on trade and suffer catastrophic consequences.” To make sure the president didn’t miss the point, he underlined the part about failing on trade and catastrophic consequences.
Who was to blame? Two White House trade staffers, Kenneth Juster (he later became ambassador to India) and Andrew Quinn (he was quickly sent back to his home agency of the trade representative’s office), and Navarro’s two biggest rivals: Cohn and Mnuchin. The “Wall Street Wing” has “effectively blocked or delayed every proposed action on trade since the President signed the order withdrawing the U.S. from TPP [Trans-Pacific Partnership],” he wrote, underlining the accusation.
How could the president rectify the situation? Navarro urged Trump to have Cabinet Staff Secretary Rob Porter, a Navarro foe, “fast track” trade initiatives and make clear to White House staff that none of Navarro’s many opponents “have the ability to delay, or veto any trade action OR make changes to any proposed trade action” unless the changes are approved by him, his ally Wilbur Ross, and an unnamed “senior policy adviser.” That probably referred to either Steve Bannon or another trade hard-liner, Stephen Miller, who focused far more on immigration than trade.
In the memo, Navarro admitted that his National Trade Council so far was “a weak legal fiction rather than a strong administrative fact.” Why? “I was not provided the rank, authority, staff, or access to fulfill my assigned mission,” he wrote, again underlining the sentence for emphasis. Journalist Bob Woodward reported that Porter didn’t forward the memo to Trump—yet another example of the globalists frustrating Navarro.1
With fresh White House access, the wiry, resourceful Navarro would try to slip into the Oval Office without others noticing. He saw himself as the protector of the president’s trade agenda doing battle with those who would turn Trump into a conventional free trade Republican. The president had promised during the campaign to withdraw from NAFTA; now Navarro told the president that Cohn and others were keeping him from fulfilling that pledge. By April 2017, Trump’s patience had run out. He told his aides he wanted to get out of NAFTA, a process that required giving Mexico and Canada written notice sixty days before exiting.
In the intimate world of Washington policy makers and influence peddlers, word of the president’s threat rocketed from administration aides opposed to NAFTA withdrawal to lobbying firms, embassies, and trade associations supportive of the trade pact. They, in turn, had their most influential members deluge White House and cabinet contacts with warnings of disaster should Trump carry out his threat.
Mexico’s president and Canada’s prime minister phoned Trump asking him to reconsider. “Let me think about it,” the president replied. Business groups urged their CEOs to call the highest-ranking Trump officials they could reach. 2Since the 1994 enactment of the trade deal, Mexico, Canada, and the United States had operated as an economic zone, with auto components, farm produce, and electronics shuttling across the border duty-free. Unraveling that arrangement could injure companies and workers in all three nations.
A political presentation by Agriculture Secretary Sonny Perdue ended the threat. He showed Trump a map of the United States with the states and counties that would be hit hardest by NAFTA’s dissolution, especially agricultural areas that had voted heavily for Trump. “It’s your base in states that are important presidential swing states,” Perdue said. “You just can’t do this.”3
Trump relented, but Mexico and Canada had been put on notice of his impatience, which was perhaps the theatrical president’s purpose. The White House put out a statement saying the president agreed “not to terminate NAFTA at this time,” but said he expected renegotiations to begin shortly.
By contrast, in the spring of 2017, confronting China wasn’t even the president’s top priority in Asia. North Korea was. Starting in February 2017, the Kim Jong Un regime fired a series of ever-more-powerful missiles, including some that flew over Japan, one that could reach U.S. troops in Guam, and, in July, one that could hit the U.S. mainland. In September, North Korea detonated underground what it claimed was a hydrogen bomb. Trump matched the military show with escalating rhetoric, threatening in August “fire, fury and frankly power, the likes of which the world has never seen before” if North Korea continued along this path.
A frustrated Trump turned to China for help. During his April summit with Xi Jinping in Mar-a-Lago, the two leaders had spent much of their substantive discussions on North Korea. Trump’s national security aides, led by National Security Advisor H. R. McMaster, briefed the president on how best to convince Xi to help. Pressing North Korea to give up nuclear weapons was in China’s interest, McMaster advised the president to argue. North Korea was bound to sell missiles to other nations, which could threaten China. A nuclear North Korea would unleash an arms race, with South Korea, Japan, and maybe even Taiwan building their own city-busting weapons.
There was no need, McMaster and others argued, to offer China a better deal on trade if it cooperates. Mixing China trade and North Korea nuclear issues would give Beijing an edge in upcoming trade talks, where Beijing could dangle help on North Korea in exchange for Trump dropping his trade threats.
In some of the conversations, Trump hewed to the advice, translating it into his own vernacular. “You know,” he said to the Chinese leader, “you could solve this if you wanted to.” But to Trump, trade was at the center of everything he did, both to reduce the U.S. trade deficit, which he saw as the cause of America’s slow growth, and as leverage for other issues.
“I explained to the President of China that a trade deal with the U.S. will be far better for them if they solve the North Korean problem!” he tweeted on April 11, two days after Xi jetted from Mar-a-Lago to Beijing. “Had a very good call last night with the President of China concerning the menace of North Korea,” Trump tweeted the following morning. Security aides shrugged; the president’s tweets caught them by surprise nearly as often as they did everyone else.
With North Korea on his mind, Trump quickly made peace with Beijing on another economic front. In mid-April, he decided not to fight China over its currency policy, despite his campaign promise to do so.
Twice a year, the Treasury Department puts out a report on currency manipulation, as a warning that it is watching to see whether trading partners are cheapening their currency to give their exporters an edge. During the 1990s and early 2000s, many economists accused China of keeping the yuan undervalued by as much as 30 percent to help it gobble up U.S. markets. Steel makers, machine tool companies, furniture makers, and labor unions added China’s currency practices to their list of complaints. Trump took up their cause during the campaign.
A designation as currency manipulator has little immediate consequence. Treasury is only required to “take action to initiate negotiations” with the offending country—and the United States and China are continually negotiating anyway. But the designation has political importance. The United States would be accusing China of cheating, which would offend Beijing and raise pressure on the White House to impose sanctions. A succession of Treasury secretaries warned Beijing that they would be forced to label China a currency manipulator—or that Congress would force them to do so—to cajole their Chinese counterparts to push up the value of the yuan. But they didn’t carry out their threats.
By the time Trump was sworn in, American pressure had largely succeeded. China’s central bank by then had spent more than $1 trillion in reserves to prop up the value of the Chinese currency, not drive it down. With China’s growth slowing, the People’s Bank of China feared Chinese investors would trade their yuan for dollars as a way to preserve their savings, triggering a run on the currency that would further weaken the yuan. China also depended greatly on foreign oil, iron ore, soybeans, semiconductors, and many other goods and services priced in dollars, all of which would become more expensive to purchase with a devalued yuan.
Still, breaking a major campaign pledge related to China was a big move. North Korea was the justification. “Why would I call China a currency manipulator when they are working with us on the North Korean problem?” Trump tweeted on April 16. Later, the president explained in an interview with the book’s coauthor, Bob, “For the first year, I was focused—I was doing North Korea and I didn’t want to let the negotiations [with China] come in the way.”4
Around the same time, Commerce Secretary Wilbur Ross was trying to work out a quick trade deal with China as part of the Comprehensive Economic Dialogue announced at Mar-a-Lago, which had a hundred-day deadline. In May, Ross reported a breakthrough that he breathlessly characterized as a “herculean accomplishment.”
After only one month of negotiations, the two nations released a joint statement on May 11 touting a consensus in ten broad categories, including agricultural trade, financial services, investment, and energy. Ross even endorsed Xi Jinping’s pet trillion-dollar project, the Belt and Road Initiative, aimed at building infrastructure in nations around that world, although Trump’s national security team viewed the initiative as a threat that could expand China’s power in Asia. Privately, Ross also offered to start free trade negotiations with China, say members of his negotiating team, a position that was the opposite of the hard-line approach Trump promised during the 2016 campaign.
“China just agreed that the U.S. will be allowed to sell beef, and other major products, into China once again. This is REAL news!” an enthusiastic Trump tweeted the following day.
But the real news was that the Chinese were repackaging stale offers and Ross, who was new at his job and inexperienced in trade negotiations, didn’t realize it. China had discussed reopening its beef market as early as 2006 after banning U.S. beef imports three years earlier amid concerns over mad cow disease. In 2013, then–Vice President Joe Biden made another pitch for beef sales during a visit to China. “You can make me a hero” if you reopened the market, he told Xi Jinping. The Chinese thought about helping Biden but eventually did nothing.
For Beijing, beef sales were a concession it could offer whenever the political heat from Washington reached a boil, as was now occurring. Before sales could proceed, though, China insisted on tough regulations. Cattle producers had to track the birthplace of the cattle, slaughter them before they were thirty months old, and make sure they hadn’t been injected with certain growth hormones—all this from a government that was unable to keep domestic suppliers from selling rotten food.
At least that pledge led to some sales. China also promised to open its electronic payment and processing market to Visa, MasterCard, and other U.S. firms. This was a replay of the pledge China made when it joined the World Trade Organization sixteen years earlier and which it hadn’t carried out. Rather than allow foreign competition, China created its own card-processing firm, state-owned UnionPay. The Ross deal committed China to “begin the licensing process,” which “should lead to full and prompt market access.”
More than a year later, Visa was still waiting for the regulatory okay to set up a wholly owned business in China. American Express won approval to set up card-clearing services, but as a joint venture with a Chinese firm, not as a wholly owned company. MasterCard was even more frustrated. In early 2019, the company restarted its efforts to crack the Chinese market by joining with a Chinese company close to the country’s central bank, which is in charge of approving credit card businesses. The joint venture finally won regulatory approval in March 2020.
Over the two months following the joint statement, Ross focused on curbing China’s steel production to relieve import pressure on U.S. steelmakers, say members of his negotiating team. That was a cause Trump championed and an issue that Ross, a former steel executive, presumably knew well. “No steel, no deal” was the Ross group’s motto. In his autobiography, Blackstone Group CEO Stephen Schwarzman says Ross asked him to help out. He pressed the Chinese to cut their steel capacity by 15 to 20 percent. When Beijing accepted, Schwarzman wrote, “Wilbur was delighted.” But the Chinese offer amounted to simply speeding up by a year its schedule of closing outmoded steel mills. 5
Beijing’s lead negotiator was Vice Premier Wang Yang, a savvy politician who had burnished his role as an economic reformer when he ran the southern province of Guangdong, which borders Hong Kong, and is known for entrepreneurship and technology development. He had been a political star since he was named mayor of a Yangtze River port city when he was thirty-three, where the locals dubbed him “baby mayor.”
Despite Trump’s tough campaign rhetoric, Wang was certain U.S.-China bonds were strong. In 2013, he had compared the bilateral relationship to a married couple. “We fight often, but in the end we have to live together,” he said during a meeting with Obama’s Treasury secretary. The two countries can’t divorce like Wendi and Rupert Murdoch had just done, he continued, referring to the high-profile split between the media mogul, who owns the company publishing this book, and his younger, Chinese-born wife. “It’s just too expensive.”
In his negotiations with Ross, Wang believed he didn’t have to give much to satisfy the Americans. Chinese money would deliver the kind of results Trump wanted, he figured.
Encouraged by the progress made by Ross and Wang, China’s giant sovereign wealth fund, China Investment Corporation, sought out the book’s coauthor, Lingling, to make sure U.S. investors and government officials knew that it would “significantly increase” its investment in the United States, especially in highways, rail lines, and high-tech manufacturing plants. At the time, CIC had more than $200 billion in foreign assets and frequently complained about the difficulty of investing in the United States. “There is a potential for Chinese companies to make more investments in the U.S. and vice versa,” said the firm’s president, Tu Guangshao. 6
Chinese officials considered sweetening the deal they offered Ross by opening China’s market further to foreign banks, insurance companies, and brokerages. But they decided that wasn’t necessary for an agreement, at least at that time. Besides, Wang had his eye on a Communist Party meeting in the fall where a new slate of leaders would be appointed and he was in line for a promotion. Better to play it safe than be criticized as yielding to the Americans.
Ross didn’t push back hard enough, say members of his team. With a tight deadline, he ignored the tough issues that were to become the heart of the U.S.-China trade battles of the following two years. The United States was certain that Chinese firms pressured their American counterparts to transfer technology, and Chinese government agencies threw up barriers to foreigners selling electric cars, computing networking, and other equipment in China, while forcing U.S. firms to store sensitive data locally. None of these issues were addressed.
“Wilbur Ross was crucified on a cross of steel,” says James Green, then the senior trade negotiator in the U.S. embassy in Beijing.
In July, the two sides planned to finish talks and declare victory. They would issue a joint statement, hold a White House press conference, and then celebrate over drinks at a Washington party hosted by Ross. But on the morning of July 19, those plans were scrapped. Details of the proposed deal circulated among senior officials, including the new U.S. trade representative, Robert Lighthizer, a trade policy veteran who hadn’t been in office when the talks began. Ross had been naïve, Lighthizer told the president. It was a terrible deal. National Economic Council Director Gary Cohn and others echoed the criticism. Infuriated, Trump berated Ross as incompetent. “Shut the fucking thing down,” he said. You’re not running China trade any longer, he told Ross.
No longer able to produce a joint statement, the two sides made separate comments in the afternoon. Both noted that reducing the trade deficit was a shared objective. They disagreed on everything else. China said that the two sides would follow up with year-long negotiations. The Americans denied that. They had no interest in the endless negotiations pursued by previous administrations, they told reporters.
Ross, then seventy-nine years old, says he didn’t screw up. “The president changed his mind [on what he wanted] and was upset,” he says in an interview. Some of the deals he negotiated played a role in later talks, Ross says.
“It’s the first time in decades that I’ve had a boss,” he adds. “There are inherent frustrations with having a boss. A boss doesn’t always accept your opinions.” Still, Ross says, the Commerce job is “the most invigorating thing I’ve done in twenty years.”7
Many in the administration, though, say he performed woefully and blame that on his inexperience in government and his advanced age. Susan Thornton, a longtime State Department China expert who served for a year in the Trump administration, said Ross misunderstood what was needed. He was trying to deliver what he thought Trump wanted—some progress on steel and increased exports—and didn’t realize that was insufficient.
“The Chinese were happy to deal with Ross,” she says. “They knew he was a businessman, that he does deals. They thought, ‘We’re Chinese. We know how to do deals. We’ll sit down and haggle.’” But lost in the back-and-forth were more nuanced issues that aren’t the stuff of business deal making—how to negotiate the opening of markets, which takes a combination of legal, regulatory, and political decision making, and enormous patience. “That’s what Lighthizer does,” she says.
* * *
For Wang Yang, the talks ended happily. In October, he was promoted to the Communist Party’s top ruling body, the seven-member Politburo Standing Committee. He is now in charge of the nation’s top political advisory body, called the Chinese People’s Political Consultative Conference. For Robert Lighthizer, the talks marked his ascension to the upper ranks of Trump advisers, with a major say on China issues.
Trump didn’t bond quickly with the tall, gravelly voiced Lighthizer, a steel industry lawyer who was about to turn seventy years old in the fall of 2017. When Trump was toying with the idea of running for president in 2011 and was pilloried as a protectionist, Lighthizer wrote an opinion piece for the Washington Times defending him. Many Republicans supported tariffs, Lighthizer argued, including Abraham Lincoln. “Skepticism toward pure free-trade dogma can be seen as well in more recent Republican leaders,” Lighthizer wrote, citing Ronald Reagan’s battles with Japan. But the op-ed was aimed more at bolstering Lighthizer’s trade philosophy than it was at establishing a relationship with Trump, whom he didn’t meet until the 2016 campaign.
Trump’s anti-China advisers recommended Lighthizer for the trade job. “Lighthizer is my trade lawyer,” Ross told the president, which wasn’t the case, though the two were allies in fighting steel imports. (Ross kept repeating the claim after Lighthizer joined the administration, as a way to try to become top dog on trade policy.)
“What is his name? Lighthamer? Lighthimer? Lighthower?” Trump would say to his aides, running through a half-dozen mispronunciations of Lighthizer’s name. Lighthizer seemed stiff and wooden to Trump, who responded to big personalities.
Still, Lighthizer was the obvious candidate to help a president who wanted to make trade deals a focus of his administration but who lacked expertise. As deputy U.S. trade representative under Reagan, Lighthizer had battled Japan on steel issues in the mid-1980s, once getting so frustrated he took a Japanese proposal, turned it into a paper airplane, and floated it back to the Japanese negotiators, in what he considered a joke. “Missile man,” Tokyo dubbed him.
As a prominent attorney for U.S. Steel, he sued to halt Chinese imports, though his team of lawyers rarely visited China to investigate. He also wrote opinion pieces opposing China’s entry into the World Trade Organization. His practice had done well enough that he was worth between $20 million and $76 million, according to government filings. In 2010, he laid out for a congressional panel how to contain a rising China, using trade law to challenge Chinese currency practices, protect domestic industries, and strip China of the benefits of WTO membership. “We must stop being so passive,” he told the panel’s members. “We should not assume that aggressive action on our part would automatically make the situation worse.” 8
Lighthizer’s friends said he never expected to have a chance to put his ideas into action. Neither political party was looking for an avowed protectionist to lead trade policy. He considered his testimony a kind of valedictory as he contemplated retirement in a few years. When Trump named him U.S. trade representative, battling China became his mission. “This is what he had been preparing for his whole life,” says his brother Jim.
He also wasn’t the uptight Washingtonian that Trump assumed he was. Although he was a doctor’s son, he saw himself as a blue-collar product of his struggling hometown, Ashtabula, Ohio. On his iPhone, he has two versions of the Bob Dylan song with the line, “I’ll look for you in old Honolul-a, San Francisco, Ashtabula.” One is by Dylan, the other by Madeleine Peyroux.
For years he raced a red Porsche 911 Targa at a track in West Virginia. When he turned forty years old, he installed a big oil painting of himself in the parlor of his suburban Maryland home. “I think everyone should have one,” he joked with friends. “I don’t mean a painting of yourself; I mean a painting of me.”9 (He still has the painting, though he displays it less ostentatiously in his new home not far from the president’s Mar-a-Lago estate.)
Lighthizer caught rides to his Florida home on Air Force One and used it to develop a rapport with Trump, who shares a similar chip-on-his-shoulder sense of humor and appreciates Lighthizer’s off-color jokes. The two began to banter about who was tougher when it came to tariffs. The trade representative also struck up a friendship with Kushner and made him a part of negotiations with Mexico, which brought him closer to the first family.
Kushner helped Lighthizer understand how Trump thought and what he wanted from different deals, and to understand when a Trump “yes” was actually a “yes,” and not just a lukewarm okay. That helped Lighthizer avoid the pitfalls that ensnared other Trump officials.
Lighthizer had once been a senior staffer to Senator Bob Dole and learned how to succeed at working for a politician who doesn’t want to share the limelight. “Bob recognizes there’s one king and he ain’t it,” says his brother. Or as Lighthizer puts it: “I stay in the trade lane and out of the press.”
As the new administration sought to rebound from the Comprehensive Economic Dialogue debacle, Lighthizer convinced officials that they should dust off a part of trade law that hadn’t been used much for decades: Section 301 of the Trade Act of 1974.
To justify tariffs or other sanctions under that provision, administration lawyers had to show China engaged in a policy or practice that is “unjustifiable and burdens or restricts United States commerce.” How hard could that be? Didn’t that define China’s trade practices? Grounding their China strategy in long-standing U.S. law would also reduce the chances that a district court judge somewhere would halt their plans if sued, as had happened many times with Trump’s hard-line immigration policies.
Since China joined the World Trade Organization in 2001, successive U.S. administrations had largely given up on unilateral trade actions and sued China through the WTO instead, a frustrating process that would take years to get a decision, and where the United States could lose the case. Lighthizer had criticized that change in trade policy during his 2010 congressional testimony. He called Section 301 “a powerful tool with which to influence our trading partners.” The United States would act as trade prosecutor, judge, and jury. 10
Years earlier, Section 301 had been criticized for precisely that reason. In April 1989, forty economists, including four Nobel laureates and four former chairmen of the White House Council of Economic Advisers, signed a statement criticizing the measure because it allowed the United States to bully less powerful nations. Two years later, University of Minnesota law professor Robert Hudec, a major figure in international trade law, attacked the law’s “towering self-righteousness.” Now Lighthizer would revive it.
In early August, Lighthizer made his case to senior White House advisers and cabinet officials gathered in the White House’s Roosevelt Room. “China is tap, tap, tapping us along,” he said, using one of President Trump’s favorite phrases, which he brought to Washington from the New York real estate world. The New Yorkers used the term to describe being jerked around; for Lighthizer it meant that Beijing regularly promised policy changes but didn’t deliver them. He punctuated his talk with bar charts showing how the U.S. trade deficit with China ballooned despite one U.S.-China negotiation after another. Beijing continued to unfairly subsidize its companies and rip off American technology, he argued.
U.S. Ambassador to China Terry Branstad, linked by telephone, asked for a delay. He wanted time to start another round of trade talks based on the rapport he was developing with Chinese leaders, but found little support. The group backed Lighthizer’s proposal to start a formal investigation of China for unfair trade practices using Section 301. “Lighthizer’s historical narrative hit home,” says a senior Trump official.
The president wasn’t part of that meeting, but he eventually agreed, though he wasn’t sure why they needed to go through such legal contortions. “Bring me tariffs,” he regularly told his advisers.
Bluster aside, Trump was wary about making a public announcement of his decision. Once again, the reason was North Korea. In early August 2017, the United Nations Security Council was debating sanctions on Pyongyang for its missile tests. UN Ambassador Nikki Haley argued that the effort was useless without Chinese support. Why risk angering Beijing now? The White House was putting together a Section 301 announcement for around August 3, when the president, surrounded by supportive business leaders, would launch his China trade offensive. That was called off until after the Security Council voted on August 5. When the resolution passed unanimously, Haley personally thanked China for its help.
The Section 301 announcement was rescheduled for August 14, when the White House was once again in turmoil. White supremacists had marched through downtown Charlottesville, Virginia, several days earlier carrying tiki torches and shouting, “Jews will not replace us.” A young protestor was killed in the melee. President Trump’s response was tepid, at best, blaming the violence “on many sides” and then staying silent for forty-eight hours before condemning the hate groups. (He would soon further inflame the controversy by saying there were “very fine people on both sides”—equating the protestors and the white hate groups.)
While White House officials debated what to do next on Charlottesville, they also had to convince the president to follow through with his Section 301 announcement. That would signal a looming trade war against the world’s second-largest economy, which had just given the United States critical support on North Korea. “I don’t want to target China,” the president told his senior aides. “Let’s leave China out of it.” He was fine with the United States investigating intellectual property theft but he no longer wanted to single out China.
Nonplussed, his aides reminded him that the point of the Section 301 investigation was to single out China. “They’re the ones stealing the intellectual property. They’re the ones forcing technology transfers,” senior aides said. “There’s no way we can do this without targeting China.”
Fine, Trump said, “but let’s take the word ‘China’ out of the speech I’m going to give.” At that point, China was mentioned more than a dozen times in a draft of his prepared remarks. 11
In the afternoon, the president signed the document during a short ceremony in the White House’s Diplomatic Reception Room, as Lighthizer, Treasury Secretary Mnuchin, and a handful of business officials watched. In his two-minute talk, he mentioned China just once and then tried to distract the attention from Beijing by broadening his attack. “We will stand up to any country that unlawfully forces American companies to transfer their valuable technology as a condition of market access,” he said.
A reporter shouted the question that was on most journalists’ minds: “Mr. President, can you explain why you did not condemn the hate groups by name over the weekend?” To which Trump replied: “They’ve been condemned. They have been condemned.” Then he added with a flourish: “You’re fake news.”
* * *
In October, Chinese Vice Finance Minister Zhu Guangyao flew to Washington to attend the fall meeting of the International Monetary Fund and to deliver a message to his counterparts at the U.S. Treasury. With President Trump due to head to Beijing the following month for a state visit, China’s leadership wanted to offer a gift. It was considering granting foreign firms broader access to China’s fast-growing banking, securities, and insurance sectors.
This was the same offer Wang Yang had decided against giving Wilbur Ross during the ill-fated Comprehensive Economic Dialogue, and one that previous administrations had sought for years. Beijing had learned its lesson. It wanted to make sure the Trump visit was a success and the two sides could tout the financial sector opening as a breakthrough.
Not interested, Zhu was told. Too little, too late. Beijing needed to do much more than dangle partial openings of individual markets, U.S. officials informed him. The United States was looking for broad-based changes.
“No, we’re not going to take your gifts because you’re just trying to sucker us,” a U.S. official told the book’s coauthor, Lingling, explaining Washington’s decision.12 Starting negotiations then “will just make us beholden to them and reluctant to slam them on other stuff.” Besides, the United States had just begun its Section 301 investigation where it was going to lay out precisely how China was screwing U.S. companies and workers.
Wilbur Ross, looking to stage a comeback in the president’s esteem, lined up deals to be announced during the Beijing trip. The president had been thrilled by a similar outcome during a May visit to Saudi Arabia. There Trump announced an arms deal worth $110 billion, with the prospect of another $350 billion in sales over the coming decade, though much of those contracts still needed to be negotiated. A delegation of top-shelf executives accompanied Trump and his entourage to Beijing, including Goldman Sachs CEO Lloyd Blankfein, General Electric vice chairman John Rice, and DowDuPont executive chairman Andrew Liveris.
On November 9, the second day of the Trump visit, the Commerce Department announced $250 billion of deals that “will bring thousands of new jobs to Americans.” But hours later, the Wall Street Journal dissected the deals under the headline: “Something Old, Something New: $250 Billion in U.S.-China Deals Don’t Add Up.”
The announcement, the Journal explained, didn’t involve actual contracts. In many cases, they were nonbinding offers. Commerce highlighted a $43 billion investment in a natural gas project in Alaska. But the U.S. and Chinese participants, including China Petroleum & Chemical Corporation, known as Sinopec, were still negotiating big parts of the deal. The $43 billion figure also reflected the estimated cost of building the natural gas project, not revenue from selling gas to Chinese buyers. “The deal is politically expedient, yet its nonbinding nature gives Sinopec the flexibility to quietly back away from the deal down the line,” according to an Asia analyst quoted by the Journal.13
Other publications also criticized the supposed deals. “Trump doles out deals in China, but will they stick?” headlined USA Today. “AP FACT CHECK: U.S.-China trade package mostly about symbolism,” wrote the Associated Press.
With the press mocking the China deal, Wilbur Ross was once again in Trump’s doghouse. During meetings between Trump and China’s senior leaders, Ross generally sat outside in the waiting area.
Still, much of the trip went well, as Beijing rolled out what it called a “state-visit plus.” This was the first state visit to Beijing by a foreign leader since the October Communist Party meeting where Wang Yang was promoted and Xi Jinping unveiled a top leadership lineup that didn’t include an obvious successor. The session confirmed Xi’s status as China’s preeminent leader.
Hundreds of elementary school students and a motorcade of twenty-one motorcycles welcomed the president at the airport. On his first day in Beijing, the Chinese leader and his wife escorted the president and Melania Trump on a private tour of the Forbidden City, for centuries the home of China’s emperors. The couples had afternoon tea and dinner there, making Trump the first president shown such treatment.
Trump returned the compliment by presenting the Chinese leader with a video of his granddaughter, Arabella Kushner, singing in Mandarin and reciting Chinese poetry. (Once again, five-year-old Arabella was cast in a diplomat’s role.) Later Trump tweeted his thanks to the Chinese leader for “an unforgettable afternoon and evening,” even though Twitter is blocked in China.
The most significant part of the trip occurred behind closed doors on the second day. Trump had meetings with Xi Jinping and Premier Li Keqiang, who oversees the State Council, the Chinese government’s top decision-making body. In both sessions, the president asked Lighthizer to explain U.S. complaints about Chinese trade practices. Lighthizer did so, with lawyerly detail. He lectured the Chinese leaders how the new administration considered past negotiations to have been fruitless. U.S. firms had their technology poached in China. The trade relationship was unbalanced, as reflected in the ever-widening bilateral trade deficit.
Lighthizer’s bluntness shocked the Chinese hosts, who complained later to Americans that they had been offended and mystified by his remarks. They had no idea that Lighthizer had replaced Ross as their interlocutor, though they should have noted something important had changed when they saw Ross sitting outside the meeting hall.
Afterward, President Trump was more conciliatory during a joint press conference. Trump called Xi “a very special man” and blamed the problems with China on past inhabitants of the White House, as he had done during his presidential campaign. Xi smiled broadly at that remark, but responded more formally. “I told President Trump that the Pacific Ocean is big enough for both China and the U.S.”14
The difference between Lighthizer’s hard-line and Trump’s soft touch confused their Chinese hosts. Was Lighthizer really talking for Trump? If he wasn’t, who was? That’s a question Chinese officials would ask themselves for the following two years.
In the state banquet that followed, the Chinese lavishly decorated a room in the Great Hall of the People and invited basketball great Yao Ming, who had starred for the Houston Rockets, to attend. The video of Arabella was played again, this time on a larger screen. Trump and his entourage were served grouper fillets in chili oil, coconut-flavored chicken soup, and wines from the Great Wall winery in Hebei province, next to Beijing.
Chinese state media touted “a new chapter of history” in the U.S.-China relationship. The Australian reported, “In Beijing, Trump was subject to world-class flattery.”
Lighthizer and his staff found themselves suddenly the object of much attention. The Chinese seated two of the seven members of the ruling Politburo Standing Committee on either side of Lighthizer. His young chief of staff, Jamieson Greer, was seated between Vice Finance Minister Zhu and Vice Commerce Minister Yu Jianhua, both excellent English speakers. Their goal: figure out who Lighthizer was and how much influence he had on China policy.
After Air Force One left Beijing, China announced the market-opening plans that Vice Minister Zhu had offered a month earlier. Beijing pledged to allow foreign firms to take a 51 percent stake in Chinese securities firms, up from 49 percent previously. The two-percentage-point difference promised to give foreigners the chance to control Chinese ventures. The announcement didn’t rate even a thank-you from Washington.