Peter Navarro’s triumphal comment was hardly the last word. Within days, Treasury Secretary Mnuchin was pushing ahead with a different plan to end the trade conflict. This time he teamed with Commerce Secretary Ross to press China to buy huge quantities of U.S. merchandise. Reducing the vast bilateral trade deficit remained the president’s main goal. Maybe a big sales package would convince Trump to settle and drop his plans for tariffs. Maybe Beijing could buy its way out of a trade war. On a conference call in mid-May with the president and members of the trade team, Mnuchin appealed to the Wall Street side of Trump. The markets were now booming because of Trump’s success in passing a tax cut and pushing deregulation. A prolonged China battle could derail those gains. A skeptical Trump gave his okay. “Go ahead and try but I don’t think you’ll get it done,” he said.
What explains Mnuchin’s persistence? He attributes it to stick-to-it-iveness and his closeness to the president, with whom he speaks nearly daily. “I tend not to give up on things,” says Mnuchin in an interview. “I’m very focused on the president’s economic plan being successful.”1
His allies say that he viewed himself as the administration’s chief financial officer—the cabinet official responsible for the economy’s overall financial health. The trade fight threatened that well-being and needed to be settled. As CFO, he didn’t need the approval of the CEO—Donald Trump—to launch initiatives, and he didn’t have to worry about the feelings of other officials.
When Robert Lighthizer was confirmed as trade representative in the spring of 2017, he received a letter, signed by the president, putting him in charge of trade policy. In interagency battles, the letter was worthless. Mnuchin had deeper ties to the president, stretching back to the presidential campaign, and Trump didn’t block Mnuchin’s way. “There is no more important relationship at 1500 Pennsylvania Ave.”—the Treasury’s address—“than the one at 1600 Pennsylvania Ave.,” says a former senior Trump Treasury official.
Mnuchin and Chinese negotiator Liu He also needed one another. To fend off pressure from powerful party officials at China’s state-owned companies and ministries who wanted Beijing to stand firm against American pressure, Liu had to show progress. Mnuchin was a sympathetic interlocutor, unlike the standoffish Lighthizer and the hostile Navarro. Liu frequently told visiting foreign business leaders how constructive Mnuchin was in trying to ease the trade conflict. Fellow peacemakers, as Liu saw it.
For Mnuchin, his ties to Liu made him the man to see in Washington when it came to Beijing. Chinese Ambassador Cui Tiankai met or telephoned Mnuchin more than forty times in 2018, according to the Treasury secretary’s daily calendar. Cui contacted Lighthizer twice.
Ross arrived in Beijing on June 2, 2018, when the air was turning increasingly smoggy in the gathering summer heat. He led an interagency team comprising the Treasury, Commerce, Agriculture, and Energy departments. The Americans recorded possible deals on a color-coded Excel spreadsheet, organized by categories—energy, agriculture, manufactured goods, and the like. Beijing did its best to make the purchasing team feel welcome. The leadership worked to head off popular resentment against U.S. tariff threats, and censors banned the use of the term “trade war” in Chinese media. But Xi Jinping had strict instructions for Liu He: the price of Chinese purchases was a pledge by the Trump administration to abandon the threatened tariffs.
Liu presented Ross with a plan to buy more U.S. soybeans, corn, coal, natural gas, and manufactured goods, which the Chinese side valued at $100 billion in the first year. The Chinese thought coal purchases would be a big winner, given the Republican Party’s concerns about upcoming congressional elections. The purchases would help Pennsylvania and West Virginia coal fields and reinforce Trump’s boast that he had revived the industry. Throughout the negotiations, Liu made clear to Ross that the offer would be void if Washington proceeded with its plan to impose tariffs on $50 billion of China-made products. The message from Xi to Trump was clear: I can help you if you back off.
But Beijing’s proposal was derided in Washington as yet another example of Ross not realizing he was being played by the Chinese. The Ross team estimated the Chinese offer at $70 billion, but even that figure was wildly optimistic. The plan didn’t include signed deals. Energy purchases would largely come from sales U.S. firms would have made to other nations. U.S. farms weren’t able to ramp up production as quickly as the plan assumed. The Commerce Department was double-counting some purchases, say industry officials consulted by the administration. China also wouldn’t commit to multiyear purchases.
To really boost imports of U.S. goods, Chinese negotiators said, sell us more high-technology equipment, especially semiconductors. Beijing had tried for years to get the United States to sell it more advanced technology and was invariably turned down. This time the administration was intrigued; some officials asked some high-tech executives what products could be freed from export controls. Lawmakers, led by Senator John Cornyn, a Texas Republican, got wind of the plan and tried to kill it before the team reached Beijing. “We implore you to reject any proposal to soften restrictions on the transfer to China of U.S.-made military technologies and advanced dual-use technologies, including semiconductors,” twenty-seven senators from both parties wrote to the administration on May 22.
Lighthizer was especially withering in his criticism of Ross’s deal. “I don’t see $70 billion. Have you seen $70 billion?” he would say, mockingly. Another skeptical official said the Chinese proposed purchases amounted to $20 billion, at most.
No one knew for sure. The Chinese proposal wasn’t reviewed by officials from different U.S. agencies to see whether the package would boost exports or represented new sales. “No matter how you looked at it, the numbers literally didn’t add up,” says James Green, a U.S. trade negotiator at the time who was involved in the effort.
Ross defends his work and says, once again, that Trump changed his mind about what he wanted from a deal. Initially the president focused on purchases but then “he decided he wanted a more all-encompassing thing,” Ross says in an interview.
“All we get to do is to try to negotiate as best we can to achieve the policies, and then bring [proposals] back to him,” he says. “He will either accept them or not accept them.” 2
Beijing was disappointed by the plan’s failure. The combination of Mnuchin and Ross hadn’t been able to win acceptance for a proposal Beijing thought was solid.
At a closed-door meeting with American CEOs in September, China’s Foreign Minister Wang Yi vented. “Vice Premier Liu He and Secretary Mnuchin had very detailed discussions down to which products and how much of each,” Wang told some ten senior executives from Cheniere Energy, Xcel Energy, and other companies. “There was no problem with importing $100 billion or more in additional U.S. goods,” he said. “Unfortunately, after they brought this agreement back to the United States, it was tossed. It disappeared.”
Mnuchin did manage to keep the relationship from unraveling further. His Treasury Department never produced the restrictions on Chinese investment that Trump threatened on May 29.
As the June 30 deadline approached, administration officials met privately in the White House Situation Room to consider alternatives. Mnuchin and other Treasury officials argued that the restrictions faced legal land mines. How would the government know which investments are Chinese, unless you consider them all? What authority did the administration have to examine every investment? Even if the government could find such authority, lengthy reviews could gum up the financial system.
“There’s not a way to design a system without a series of loopholes that are easy to exploit, or where well-intentioned investment that intends to seek out profits isn’t allowed in the United States,” said an official involved in the decision.
The administration had been considering using the extraordinary powers granted to the president under the International Emergency Economic Powers Act (IEEPA). If Trump declared a national emergency, he could block transactions and freeze assets. But IEEPA is used mainly to block assets of terrorist groups, and lumping Beijing in with ISIS would have been a slap in the face for China. Treasury was in charge of administering such sanctions and Mnuchin broadly opposed using the power for reasons outside of national security. Trump backed him on this.
Others, including Navarro, thought the Treasury was inventing excuses to block an initiative it opposed. This time the president rebuffed the hard-liners. Despite his constant resort to threats and tariffs, he wanted foreigners to invest in the United States. As a businessman, he had relied on overseas buyers for his real estate deals.
Rather than block Chinese investments, he directed the administration to endorse a bill making its way through Congress that toughened national security reviews of foreign investment in the United States. The bill had narrower restrictions than the White House had initially envisioned for China. “The president’s view has never been that we should cut off investment from China,” says Mnuchin in an interview.3
* * *
With the failure of the purchasing initiative, the White House’s National Economic Council started a quixotic effort to get the president to focus less on the trade deficit and more on the structural issues at the heart of the Section 301 report. It was a long shot. From the start, senior economic officials like Trump’s first NEC director, Gary Cohn, had tried to convince Trump that a trade surplus or deficit—especially with one country—wasn’t a measure of economic success. Neither economic growth nor job production depended on whether exports outpaced imports. The trade deficit fell by about half during the 2009 recession, for instance, because American consumers had less money to spend on imports.
The White House arguments got heated, with Cohn and Navarro trading insults. The U.S. economy would be far better off if the goods the United States imported were made in America instead, Navarro argued. When others made complicated arguments that linked budget deficits and trade deficits, Navarro dismissed them as “the same old globalist bullshit.”
In early 2018, conservative economist Stephen Moore, who had advised Trump during the campaign, and Arthur Laffer, one of President Reagan’s favorite economists, prepared a series of charts showing that “economic prosperity in America has been strongly and positively correlated with trade deficits, not trade surpluses,” says Moore. The data stretched back to colonial times and showed how the trade deficit declined during the Great Depression. Their longtime friend, NEC Director Larry Kudlow, got them a session with the president to present the evidence. Trump listened, “but I don’t think we persuaded him,” says Moore. The septuagenarian president was hardly ready to rethink arguments he had made for decades.
In the summer, Kudlow held a series of lunches. This time he tried to recast the issue. Focusing on the trade deficit was less effective than concentrating on the Section 301 complaints. The deficit focus was bound to upset allies the United States could use in its battle with Beijing, Kudlow argued. They would worry that China would increase U.S. imports by reducing their sales. Concentrating on structural issues like subsidies and forced technology transfer could unite allies, who had similar complaints against China. Convincing China to reduce tariffs and other barriers was also a winner because it would encourage China to boost imports long-term, not just as a short-term fix to get the United States off its back. He urged CEOs who met with the president to make similar points.
The effort worked for a while. During the summer of 2018, there was a noticeable drop in how often Trump used the trade deficit to justify his trade war. Trump tweeted fifteen times between March 2 and June 10, 2018, about the importance of the trade deficit. He tweeted about it just three times the rest of the year, though he never dropped the concept entirely.
Other administration officials made a similar shift, including Mnuchin, who was ever-sensitive to changes in Trump world. Although Mnuchin had pressed Beijing to buy more farm produce to shrink the trade deficit, he had a different message in an August 28 appearance on CNBC. “As the president said, it’s not just about buying more soybeans,” Mnuchin said. “This is about structural changes that create fair market access.”
But Trump never fully accepted his advisers’ arguments. Clete Willems, the White House trade adviser, says he began to understand why the president focused so much on deficits when he accompanied him on a trip to London. There the president complained to British Prime Minister Theresa May about Germany backing the Nord Stream 2 natural gas pipeline between Russia and Germany because it transferred wealth to Moscow. “It’s like the trade deficit with China,” Trump told May. “We give them money, which makes them stronger.”
For Trump, a trade deficit with China meant Americans were transferring their money to China, making China wealthier and more powerful at U.S. expense. Just another example of the United States making China a winner and the United States a loser. By that same logic, of course, Chinese purchases of trillions of dollars of U.S. bonds would be making the United States more powerful at Chinese expense because of the money flooding into the Treasury’s coffers. But Trump never bought the latter argument; the administration looked at Chinese purchases of U.S. Treasuries as a weakness because Beijing could threaten to dump the securities and drive up U.S. interest rates.
* * *
On June 15, the administration announced the details of the 25 percent tariffs it would impose on $50 billion of Chinese goods. The United States divided the tariffs into two parts, with levies on the first $34 billion going into effect on July 6, and the rest later in the summer after additional hearings to get public comment. The tariffs hit 818 different product categories, though clothing, furniture, mobile phones, and other consumer goods weren’t hit. Many of the proscribed goods were industrial components that only factory hands could identify. The Council of Economic Advisers had created a computer algorithm to go through every line of products the United States imported from China and picked those where tariffs hurt China more than the United States.
The administration claimed that putting levies on these goods would make it harder for China to move ahead with its “Made in China 2025” plan to dominate advanced technology, although the levies had big downsides. Raising the price of imported diodes, electric motors, plastics, and other widgets was bound to raise the costs of manufacturing in the United States and make American manufacturing less competitive.
Should China retaliate, as it quickly warned that it would, Trump threatened on June 18 that the United States would hit another $200 billion in Chinese imports with tariffs. Retaliate again and the United States would target another $200 billion in Chinese imports. That would mean tariffs on nearly all the $505 billion in goods that China sold to the United States in 2017. Trump, as schoolyard bully, was threatening to batter his opponent into submission.
With the deadline approaching, Beijing moved to line up allies and present itself as a victim of U.S. economic aggression. At meetings inside Beijing’s gated Zhongnanhai leadership compound, officials worked out policies that would help U.S. trading partners get broader access to China’s market, but deny the benefits to U.S. firms. Trump needed to understand what the United States would lose in a trade war.
By the early summer, the State Council, China’s top government body, was ready to lower tariffs on imported washing machines, cosmetics, and other consumer goods. It was also drafting what it called a “negative list”—limiting the areas that were off-limits to foreign investors.
If the United States imposed tariffs on Chinese imports, Beijing would retaliate with tariffs on U.S. imports. Effectively, that meant U.S. exporters wouldn’t benefit from China’s planned liberalization, while exporters from Europe, Japan, and elsewhere would. Beijing figured that U.S. companies would press the Trump administration harder if they feared being left out of the growing Chinese market.
Beijing also sought multilateral trade deals as a way to help its exporters if they were blocked from the U.S. market. That included an investment agreement with the European Union, which would help EU companies expand in China ahead of American ones. Beijing also tried to speed up negotiations over the Regional Comprehensive Economic Partnership (RCEP), a trade deal involving fifteen countries in the Asia-Pacific region, which excluded the United States. By early 2020, China, Japan, South Korea, Australia, and other countries agreed on the outlines of a trade partnership but India pulled out for fear that its economy could be flooded with Chinese manufactured goods and Australian and New Zealand farm imports. Chinese leaders pledged to address those concerns.
But Beijing still found it difficult to tempt longtime U.S. allies to join forces. Japan, which saw China as a military threat, convinced Washington to explore multilateral pressure on China. Negotiators from the United States, EU, and Japan met periodically to plot joint policies on subsidies and forced technology transfer. Tokyo hoped to use these talks as a launchpad for negotiations at the World Trade Organization that would bring global pressure on China to change.
To improve their chances at winning allies, Chinese leaders worked on their image overseas. In March, China Film Group, a state-owned monopoly, started to distribute a ninety-minute documentary called Bravo, My Country. The film heralded the country’s high-speed rail lines, a massive bridge-and-tunnel system linking the cities of Hong Kong, Zhuhai, and Macau, a supersized radio telescope that could be used to detect signs of extraterrestrial life, and the development of superfast wireless technology called 5G. A month later, however, the film was removed from video sites.
“It was just too boastful,” said a senior editor at a state-owned newspaper in Beijing, especially when foreign competitors suspected Beijing was trying to overtake the West.
Looking for other ways to get its message out, Liu He instructed the Chinese Economists 50 Forum, an influential think tank he cofounded, to hold an event at Tsinghua University in Beijing, called “A Conversation of Thoughts between China and the World,” and to invite Western opinion leaders.
Among the attendees were journalist Carl Bernstein, well known in China for his Watergate reporting; New York Times columnist Thomas Friedman, whose scathing pieces on the Trump administration often circulated among Chinese officials; historian Niall Ferguson, who coined the term “Chimerica” with a colleague to describe the symbiotic relationship between China and the United States; and Financial Times economics columnist Martin Wolf, who has a big following in China.
It’s rare for Chinese officials to court foreign journalists, and officials wanted to control how they would be covered. Those invited could report on the gist of their messages, but the officials insisted that they not be identified by name. Under those conditions the officials sought to improve Beijing’s image, or at least clarify the leadership’s intentions.
Yang Weimin, at the time a top deputy to Liu He, explained that Xi Jinping’s pledge five years earlier to give the market a “decisive role” in the economy didn’t mean the government wouldn’t play a role. The market was responsible for pricing assets and resources, while the government set macroeconomic policies and regulations, Yang said, according to a transcript of the forum. All in all, not much different from the market reform policy ushered in by Deng Xiaoping, which the West had applauded.
But he warned that China was suspicious of U.S. motives and believed that Washington wanted to keep China from advancing. “You can’t let China only make T-shirts while the U.S. does high-tech,” Yang said. “That is unreasonable.”
Some speakers denied Washington’s allegations that China subsidizes state companies. “There are no subsidies, that’s for sure,” said Ning Gaoning, chairman of the state-owned China National Chemical Corporation, known as ChemChina. But he did admit that the government had handouts for favored industries, such as wind power and fuel ethanol, though he said that was open to private firms, too. “That is industrial policy, not policy just for state-owned enterprises,” Ning said.
Others at the forum were more forthright. Major General Zhu Chenghu, dean of the Defense College at China’s National Defense University, said the Chinese military had learned a lot from the United States. By 2049, the hundredth anniversary of the People’s Republic, he said, China’s armed forces would become a world-class military, as promised by Xi Jinping. That means “we can be benchmarked against the U.S. military,” Zhu said.
As the date for the tariffs drew closer, Xi Jinping’s hope for a quick deal all but vanished. He resorted to more of a bare-knuckle approach, looking to bully Trump’s corporate friends. Washington couldn’t miss the signal.
On June 21, a group of twenty mostly American and European multinational CEOs gathered at the Diaoyutai State Guesthouse for their annual meeting. The group, called the Global CEO Council, had in the past met with Premier Li Keqiang rather than the president. By taking the meeting himself, Xi sought to press business leaders to help him get American politicians to ease off on China and to warn them they could be wounded in a trade war if they failed.
“In the West you have the notion that if somebody hits you on the left cheek, you turn the other cheek,” the Chinese leader said. “In our culture, we punch back.”
Preferential treatment awaited those companies whose home countries weren’t fighting with China. “If one door closes, another will open,” Xi said, using the indirect language of the Chinese leadership to deliver a very direct threat. The group included executives from Goldman Sachs Group, Prologis Inc., Hyatt Hotels Corporation, and other U.S. firms. European firms included Volkswagen Group, AstraZeneca PLC, and Schneider Electric SE.
At the end of the gathering, Xi’s frustration with the United States boiled over. “We respect your democratic system,” the Chinese leader said. “Why can’t you respect ours?”
* * *
July 6, 2018 was a typical summer day in Washington, D.C. The temperature neared 90 degrees at noon, and thunder showers passed through town at dinnertime. There was little to mark the day as the start of a trade war with China that would rock global markets and threaten to dump both nations into recession, as the United States put in place its first round of tariffs aimed solely at Beijing. Steve Bannon, President Trump’s onetime chief strategist, was gleeful. “China has been in a trade war with us for twenty years,” he said. “Now someone is standing up and fighting for American workers.” But the White House was silent, not even putting out a press release to mark the moment. “The president didn’t want to make a big deal of it,” said a senior White House official. “He values his relationship with Xi.”
The battle quickly deepened. Although White House trade adviser Peter Navarro had predicted that China would be too cowed to retaliate, Beijing did just that. In striking back, China chose 545 types of goods that would face the same 25 percent tariffs that the United States had picked to shut out Chinese imports. The initial targets included soybeans, pork, chicken, seafood, sport utility vehicles, and electric vehicles. Later in the summer, industrial components were added to the list. If Trump wanted a trade war, Beijing would make sure farmers and rural areas, Trump’s core supporters, would suffer.
Both sides started with levies on $34 billion of goods, with tariffs on an additional $16 billion to roll out in early August. But before the second round of tariffs was put in place, Trump vastly upped the stakes. Angered at the temerity of China to match U.S. tariffs dollar-for-dollar, on July 10 the administration started legal proceedings to tag another $200 billion in Chinese goods with 10 percent tariffs, which Trump later said might be raised to 25 percent. Because U.S. imports of $505 billion in goods from China far surpassed China’s U.S. imports of $130 billion, Trump figured the United States had the upper hand in a trade battle. The United States had far more room to assess tariffs than China did. “They’ll run out of bullets first,” he told aides.
The impact of the tariffs began to sweep through both nations during the summer. In the early part of 2018, exports had been one of China’s strengths, rising 4.9 percent in the first half of the year. China’s shipments to the United States also continued to grow, up 5.4 percent during the period. Both figures continued to increase in the following months despite the U.S. tariffs, as Chinese manufacturers raced to fill holiday orders from their American customers and ship goods before the trade conflict got worse.
But the trade fight cast a pall over business and investor confidence in China’s economy, which was already slowing due to government efforts to control borrowing and rampant investments. China’s markets swooned. Businesses delayed or canceled expansion plans, and consumers started to tighten their purse strings.
In the southern boomtown of Shenzhen, a few miles from Hong Kong, factory owners Du Yaliang and his wife, Shao Danping, were among the manufacturers who saw orders dry up as customers sought other sources of supply. The couple’s Shenzhen Wonder Office Appliances Company made machines that print numbers, expiration dates, and other information on plastic cards. Shenzhen Wonder’s customers were mainly American. Although the company’s products weren’t on Trump’s initial hit list, sales dropped anyway because American customers were wary the firm would eventually be targeted.
By early fall of 2018, production machinery in the three-story factory was largely sitting idle. Half the factory’s first floor was leased out to another company. “We didn’t feel anything even during the 2008 global financial crisis,” said Shao, an engineer-turned-entrepreneur in her late fifties. “The trade war is really killing our business.”
In the United States, the initial tariffs jacked up the price of machinery components, which started a hunt for alternatives to China. In Elkhart, Indiana, where most of the nation’s recreational vehicles are made, China tariffs piled on top of steel tariffs to increase prices of RVs and drive down sales. The decline came after eight years of stunning growth and unemployment so low that a Kentucky Fried Chicken restaurant in the area offered $150 signing bonuses for workers.
Robert Martin, chief executive of Thor Industries Inc., the nation’s largest RV maker, says he was in the waiting room of Jim Cramer’s Mad Money TV show in March 2018 when he heard that Trump decided to impose steel tariffs. He figured that the threat of tariffs was enough to get buyers to delay buying expensive RVs. Facing falling sales, RV makers “de-contented” some of the products, Martin says, meaning they started using less expensive flooring, cabinets, and sofas to try to keep prices from rising too much because of the tariff hit.
Still, Elkhart was a place where tariffs sometimes worked as the administration hoped they would to drive production out of China. When Chinese electric motors were hit with U.S. tariffs, LCI Industries Inc., an RV component maker, switched to suppliers in India, Vietnam, and Malaysia. LCI CEO Jason Lippert says he started manufacturing jacks and other hydraulic parts in Indiana rather than China after he reassessed his production costs because of tariffs.
For Savannah Luggage Works in Vidalia, Georgia, one of the few remaining American luggage makers, the impact of the tariffs4 was devastating. Savannah produces luggage for brand-name companies that want Made-in-America products. The wheels, hand assemblies, and plastic parts Savannah used came from China, where nearly all American luggage makers had moved their factories. After these components were hit by tariffs—or simply threatened with tariffs—Savannah’s biggest luggage customer dropped the firm in the summer of 2018.
“They needed a certain margin,” says Allen Rice, the company’s president. “Once the tariffs came in, they couldn’t get the margin.” Savannah leased out one of its three factory buildings that it no longer needed.
China’s retaliatory tariffs also hit hard, especially in farm states. Soybean prices dropped 20 percent as sales to China fell by more than 90 percent after the tariff decision. Pork sales also fell sharply. In Minnesota, soybean and corn farmer Keith Schrader said in July that depressed prices had soured his outlook at his 5,000-acre operation. “When the trade stuff hit—boom—we went back to unprofitability,” Schrader said.5
Trump looked to cushion the blow for his farm state supporters with a $12 billion program of farm payments, which the Agriculture Department calculated would equal the impact of the Chinese tariffs. However, the United States had no answer for other forms of Chinese retaliation.
China’s antitrust regulator delayed for so long its approval of Qualcomm Inc.’s planned $44 billion purchase of Dutch company NXP Semiconductors NV—a deal widely seen as critical for the U.S. chip maker—that the acquisition fell apart. In late May, when trade talks between the United States and China looked promising, the Chinese regulator hinted it was ready to wrap up the review and clear the transaction. But after the United States imposed tariffs, President Xi expressed reservations about approving the deal for fear the combined company would be too tough a competitor for Chinese firms. Xi didn’t return Trump’s favor when the president took political heat for sparing China’s ZTE Corporation from a death sentence.
“No U.S.-related deal could be cleared without approval from the higher-up,” a Chinese official says.
By the summer of 2018, some lessons should have been clear to Beijing, though China’s leaders still didn’t seem to get the message. The road to a deal with Trump led through Lighthizer, not Mnuchin, whom Trump and his trade guru Lou Dobbs saw as soft on China. Trump saw little reason to back away from his tariff strategy, which was hurting the Chinese economy, but hadn’t so far frightened U.S. markets. The Dow Jones Industrial Average rose 1,500 points in the two months following the July 6 imposition of tariffs.
And China could no longer count on its U.S. business allies to be effective lobbyists in the White House on trade issues. Trade groups formed coalitions to halt the tariffs and failed. The most they received was a pledge by the trade representative to hold hearings on the impact of tariffs, which gave businesses the chance to state their case. Lighthizer, a careful lawyer who fretted about the trade offensive being overturned in U.S. courts, surely would have held the hearings anyway.
While the White House worked closely with business groups on tax cuts and deregulation, and the president nominated former lobbyists to cabinet posts, business had little sway when it came to trade. Years of lobbying for China—from pressing President Clinton to overturn his human rights policy to spending heavily to get China into the World Trade Organization—had caught up with Corporate America.
When Lighthizer spoke before the Business Roundtable, a big business trade group, back in September 2017, he made his views clear to an assembly of one hundred CEOs. “I understand where you’re coming from and you have to maximize profits, and that means doing everything, including exporting jobs,” he said. “My job is different. My job is to represent American workers.” To the Trump White House, business groups were a stand-in for Beijing.