With the Trump administration bearing down on Beijing, China’s leaders turned to their closest American friends, the Fortune 500 firms that had lobbied for decades on their behalf. In the early 1990s, as we have seen, China’s corporate allies pressured President Clinton to drop plans to punish China for oppressing dissidents and other human rights violations. Later in the decade, they spent more than $100 million lobbying Congress to clear the way for China to join the World Trade Organization. The corporate campaigns were so successful that no administration since then, including Trump’s, has tried to link China trade with human rights.
During the Hong Kong prodemocracy protests, Congress in November 2019 passed legislation by a near-unanimous vote mandating an annual review of Beijing’s treatment of Hong Kong’s autonomy, which certainly included respecting human rights there. Punishment would include ending the city’s special status, which exempted Hong Kong from the U.S. tariffs and sanctions applied to other Chinese cities and helped make it an international trade center. While the measure reestablished a trade–human rights linkage, Trump only approved the bill reluctantly; a veto could have been easily overridden. He picked the night before Thanksgiving to sign the bill into law and his aides briefed the Chinese government on his plans. The symbolism was impossible to miss: Trump, like presidents before him, had little stomach to pick a fight with Beijing over human rights. A battle could hurt corporate America, which often chose Hong Kong as a gateway city to Asia.
In the schoolyard version of the U.S.-China trade imbroglio, Beijing was turning to its bodyguards for help. American CEOs had convinced prior presidents to back off. Trump, a businessman, would surely cave, too.
But this time when Beijing asked its old friends for help, it often got a cold shoulder. U.S. businesses were angered by a slew of Chinese practices, including technology theft, steep subsidies to their state-owned firms, rigged courts, and phony investigations. Quietly they fed Trump administration officials the information they needed to launch an offensive against Chinese economic policies.
And when the Trump team used tactics that both corporate America and China opposed—especially tariffs on hundreds of billions of dollars of Chinese imports—corporate America was powerless to stop the administration from moving ahead. The president, who relied on big business to fight for his tax cut, lobby Congress over deregulation, and bankroll his reelection campaign, rebuffed his business pals when it came to China.
“The Chinese figure that the bankers and big business own the American government. That’s why they go to them,” says James McGregor, who has worked for decades in China as a business consultant and a leader of the American Chamber of Commerce in China. “The Chinese are discombobulated now.”
In the 1990s, the three leading U.S. corporate trade groups—the Business Roundtable, U.S. Chamber of Commerce, and National Association of Manufacturers—competed for credit with Beijing for lobbying to get China into the WTO. Their members wanted to be first in line when China opened its markets. In the Trump trade war, the three groups took a much different stance. Each publicly proposed agendas for the administration to pressure China to drop objectionable practices. The government’s Section 301 report on Chinese forced technology transfer, which served as a kind of declaration of war in the trade battle, cited submissions by the U.S. Chamber fifty-four times. Executives at the three groups presented a united front to press China for change.
“The U.S. business community in China, so long an advocate of good bilateral relations, can no longer be relied upon to be a positive anchor,” declared the American Chamber of Commerce in China in April 2019 when it released its annual report on the country’s business climate. “The mood has shifted.”1 The lobbying group’s survey two months earlier showed a majority of its members favored Washington keeping at least some tariffs on Chinese merchandise as a way to make sure Beijing kept its word. The survey’s results certainly didn’t win the group any brownie points with the Chinese government.
The change in attitude toward China didn’t have a single cause. American businesses faced a steady accretion of practices they found offensive, which accelerated after the global financial crisis in 2008 and 2009. Beijing’s “Made in China 2025” report, which laid out goals in 2015 for China to become number one in advanced technology, crystallized concern, as we have seen. Western firms figured the only way Beijing could reach those goals was by stealing their technology and subsidizing their competitors.
Xi Jinping’s increasing reliance on state-owned firms and government power also spooked American firms, as did a cybersecurity law that required foreign firms in China to store sensitive data in the country and favor Chinese network equipment over foreign products. Another concern: China had started to put in place an expansive system for monitoring company behavior, called the corporate social credit system, which could be used to blacklist firms that didn’t yield to government demands.
A 2019 study by researchers at the University of Pennsylvania, the University of California, Berkeley, and Microsoft Corporation, called “Can a Tiger Change Its Stripes?” documented how Beijing increasingly subsidized state-connected firms. In 1998, before China joined the WTO, 15 percent of state-owned firms had subsidies. In 2013, 45 percent did, though the number of such firms was greatly reduced. Even firms that the state sold off could count on government aid. In 1998, fewer than 15 percent of the privatized firms were subsidized; in 2013, 25 percent to 35 percent received handouts. Formerly state-owned companies “enjoy lower interest rates, larger loan facilities, and more subsidies while suffering poorer performance” than private firms that had no state connections, wrote the researchers. 2
Market incentives that Beijing once saw as tools to invigorate the economy now were feared as beyond government control, and as potential agents of chaos. “Risks are everywhere in the society, and now more than ever, the government should play a bigger role” in guiding the economy, says Liu Shangxi, a senior adviser to the leadership and head of the Chinese Academy of Fiscal Sciences, a government think tank.
* * *
Corporate executives were able to influence Trump’s China policy mainly at the margins, especially when they could argue that his sudden policy shifts threatened to backfire politically. That occurred when Trump suddenly proposed new tariffs on Mexico.
The president wanted U.S. firms to leave China and move to the United States, but his advisers realized a large-scale exodus to the U.S. was unrealistic given America’s higher wages and shortage of skilled blue-collar labor. The administration renegotiated the North American Free Trade Agreement, in part, to give Trump’s blessing to Mexico as a low-wage haven for China corporate refugees. In Mexico, they could get tariff-free access to the U.S. market, an increasingly powerful incentive as Trump piled on Beijing. The president announced the completion of the trade deal, renamed the U.S.-Mexico-Canada Agreement, on October 1, 2018, in the Rose Garden. Trump’s former chief strategist, Steve Bannon, called it “a great day to be alive.”
But seven months later, Trump sought to use trade to squeeze Mexico on immigration. On May 30, 2019, he threatened Mexico with tariffs of 5 percent, which he said he would increase to 25 percent, despite the renegotiated NAFTA, unless Mexico did a better job of stopping migrants trying to cross the U.S. border. The threats made a hash of any plans U.S. companies had of moving from China to Mexico. Out went the promise that goods produced in Mexico would have tariff-free entry into the United States. Companies had to factor into their decision-making Trump’s readiness to impose tariffs on any country on a whim.
Treasury Secretary Mnuchin convinced the president to hold off for a week. That would give Mexico time to react and also reduce the market impact. It also gave him time to organize CEOs to lobby the president. Executives from car companies, banks, and technology firms, among others, called into the White House and argued that the president’s tariff threat was holding the U.S. border states ransom to his policy shifts. This would harm the U.S. economy and hurt Trump politically. The U.S. Chamber released a state-by-state analysis of the economic damage.
Others in the Trump cabinet objected, too. Trade Representative Robert Lighthizer warned that the move could endanger congressional approval of the new NAFTA. Secretary of State Mike Pompeo cautioned about the impact on U.S. relations with Mexico and other nations.
A week later, Trump dropped the threat, as Mexico pledged to toughen border enforcement, though businesses continued to worry that he could, at any time, threaten border trade again.
Mexico was the exception where business was able to convince Trump to reverse himself on a trade measure. There China policy was a secondary consideration to the tumult at the border and Trump’s focus on illegal immigration. The president’s closest corporate friends and advisers had little ability to influence the way he ran his trade battle with Beijing. For the most part, they acted as intermediaries, trying to get a new round of talks going after either side shut down communications. They provided intelligence about what the Chinese were thinking, and did the same for their Chinese friends who needed intel on the Trump team. Corporate executives also warned the president that layering tariff after tariff on China would tank the stock market, push the economy toward recession, and endanger his chances at reelection. Those warnings sometimes gave Trump pause, but they didn’t stop his relentless use of tariffs to try to bludgeon China.
His cast of corporate advisers on China included casino owners whose businesses depended on a thriving Chinese economy. In 2017, former Las Vegas casino magnate Steve Wynn, whose Macau casinos relied on licenses from Beijing, hand-delivered a letter to the president from the Chinese government about Guo Wengui, a wealthy fugitive who criticized the Chinese leadership for corruption, the Wall Street Journal reported.3Beijing wanted him sent back to China. The United States didn’t return Guo, who some later accused of acting as a double agent 4for Beijing by helping to identify dissidents. Guo’s attorney, Daniel Podhaskie, released a statement saying that the spy charge “utterly lacks credibility” and that Guo is Beijing’s “most wanted dissident worldwide.” A Wynn spokesman has denied he had tried to help Beijing.
In August 2019, the U.S. Chamber’s executive vice president, Myron Brilliant, recruited casino billionaire Sheldon Adelson, among other big Republican contributors, to make the case to the president that he should patch up relations with China. Adelson depended enormously on China. His casino company, Las Vegas Sands Corporation, has had operations in Macau since 2002, and in 2018 the company derived nearly two-thirds of its income from the Chinese gambling hub. Most of Adelson’s earlier lobbying involved Israel and his pet project of getting the United States to move its embassy to Jerusalem.
Now Adelson and other executives were worried that Trump would go through with a threat he tweeted in August to “order” U.S. companies to leave China. In discussions with Trump, Adelson warned that additional tariffs would makes businesses hesitant to invest and would damage Trump politically by ratcheting up prices for consumers. The calls came before the president delayed some tariffs and restarted talks. Adelson’s lobbying came at an opportune time to get results. Both Beijing and Washington feared a market collapse if they didn’t keep talking.
Adelson is especially close to the president. He wrote a $5 million check for Trump’s inauguration and, along with his wife, gave $20 million to his presidential campaign. If Trump ignored Adelson’s wishes, the casino magnate might be less generous for his 2020 run. The president certainly courted the Adelson family. He awarded Adelson’s wife, a doctor, the Presidential Medal of Freedom, the nation’s highest civilian honor, and flew to Las Vegas in April 2019 to address the Republican Jewish Coalition at Adelson’s Venetian hotel.
Mnuchin praised Adelson on Lou Dobbs’s cable show in September 2019. “When other people weren’t stepping up, Sheldon was stepping up” to help the campaign in 2016, the Treasury secretary said. “He does have interests [in Macau]. But he has pretty good perception from having done business in China. And that’s really his counsel.”
Both Trump and the Chinese leadership also regularly turned for assistance to Stephen Schwarzman, the billionaire cofounder of the private equity firm the Blackstone Group. He worked hard to build relationships on both sides of the Pacific, and once remarked that most Americans “know next to nothing about China.” In 2013, he sought to change that by donating $117 million to fund a scholarship program, named after himself, and over the years raising another $450 million to bring two hundred mainly American students to China every year for study at Beijing’s prestigious Tsinghua University. Xi Jinping is a Tsinghua alumnus, as are many of the country’s top political and business leaders. Schwarzman’s largesse improved his access to them.
For a time, China’s sovereign wealth fund, China Investment Corporation, owned 9.9 percent of Blackstone—just short of the percentage that could have triggered a U.S. national security review. The CIC investment, Schwarzman said in his autobiography, What It Takes: Lessons in the Pursuit of Excellence, made him a “minor celebrity” in China.
In April 2018, when Xi Jinping appeared at the Boao Forum, an international conference on the resort island of Hainan, Chinese trade negotiator Liu He tapped Schwarzman on the back during a dinner for Xi. Liu asked him to explain Trump’s trade and political strategy to the group, which included Alibaba Group founder Jack Ma and former United Nations General Secretary Ban Ki-Moon. Trump isn’t a conventional politician, Schwarzman told Xi. He wants a good relationship with China, but he’ll use pressure tactics to get you to the table and make a deal. “He’s not making empty threats,” said the Blackstone CEO.
The Blackstone Group is one of America’s largest real estate developers, a credential that goes a long way with Trump. Schwarzman and Trump have known each other for years and Trump regularly sought Schwarzman’s approval—and cash for his political campaign. He is also friends with Mnuchin; the two have apartments in the same building in Manhattan and sometimes vacation together. Schwarzman backed other Republicans in the 2016 presidential race but did come through with $250,000 for Trump’s inauguration and $344,000 through early 2020 for his reelection campaign.
Once in office, Trump appointed Schwarzman to run a business advisory group. In the wake of Trump’s comments seeming to embrace neo-Nazis during the violent protests in Charlottesville in August 2017, Schwarzman polled his members to see what they wanted to do. They decided to disband but before they could act, Trump shut down the panel, although he didn’t hold Schwarzman responsible for the embarrassment. The two men talked once every week or two, and the subject often turned to the economy and China. Schwarzman says in his book that he made eight trips to China on Trump’s behalf in 2018, “trying to assure China’s most senior officials that the president was not looking for a trade war” and reporting Chinese views to Trump or his advisers.5
Other U.S. business leaders also had strong ties to the Chinese leadership and consulted with the administration on China policy. They include former Treasury Secretary Hank Paulson and his onetime Goldman Sachs colleague John Thornton, who played an important role as intermediary during December 2019 negotiations for a limited deal. But they didn’t have close ties to Trump either, especially Paulson, who was a never-Trumper and backed Hillary Clinton in 2016. As we have seen, Paulson remains close to Treasury Secretary Mnuchin, who considered Paulson to be his mentor when both worked at Goldman Sachs.
At the same time that Adelson got involved in trying to patch up trade talks in mid-2019, Mnuchin reached out to Schwarzman, Paulson, and others for intelligence about what the Chinese were thinking and planning. Chinese leaders were no longer talking to the Americans. “We’re flying blind,” the Treasury secretary said. Schwarzman tried to make clear to the Chinese that they wouldn’t intimidate Trump by not talking. To Trump, Schwarzman emphasized the economic costs of the continuing trade fight and the risks to market confidence.
The facilitator role played by Trump’s business friends outraged the president’s most hawkish aides, especially White House trade adviser Peter Navarro, as described in chapter 12. In a November 2018 speech at the Center for Strategic and International Studies, a Washington think tank, he let loose. “Globalist billionaires are putting a full-court press on the White House” ahead of an upcoming meeting with Xi, Navarro said, his anger rising. “If there is a deal, it will be on President Donald J. Trump’s terms, not Wall Street terms. If Wall Street is involved and continues to insinuate itself in these negotiations, there will be a stench around any deal that’s consummated.”
Navarro didn’t name any particular business executives, though he did cite Goldman Sachs. But it was clear from his private railings that he was including Schwarzman in his list of unnamed backstabbers. To Navarro’s enemies in the White House, this was a golden moment to take him down. Navarro was attacking people the president admired and considered friends.
“He was not speaking for the president,” White House economic adviser Larry Kudlow told CNBC a few days later. “I actually think he did the president a great disservice.” Privately, Kudlow tried to get Navarro banned from television, if not fired. White House aides said the CSIS speech was Navarro’s “Scaramucci moment”—referring to the woebegone former White House communications director, Anthony Scaramucci, who was dismissed after ten days on the job for savaging White House officials during a magazine interview.
The anti-Navarro effort failed. Navarro was barred from TV for a while. But as in the past, the president saved him. Trump appreciated Navarro’s loyalty and toughness. “I have to keep him around,” Trump would tell his staff, half-jokingly. “He’s the only one who agrees with me.”
* * *
China’s leaders took far too long to fully appreciate that their old corporate pals were no longer able to bail them out. That made Beijing unprepared to deal with Trump and his demands, and even more unwilling to make the changes necessary to reach a deal. Their obtuseness means the blame for the prolonged trade war lies as much with Beijing as it does with Washington.
Initially, Chinese leaders dismissed U.S. complaints as whining. American businesses still invested in China and made lots of money, they believed. Americans should have faith that China would liberalize, although at its own pace. They needed to learn how to compete in a rapidly developing China. “There is more competition on the Chinese market,” says China’s ambassador to the United States, Cui Tiankai. “Maybe the days of so-called easy money in China are gone. Maybe they are gone forever.” 6
Early in the Trump administration, big corporations hardly presented a united front when they met with their Chinese counterparts. It would take time for the CEOs to refine their arguments and screw up the courage to talk candidly with their Chinese contacts.
At the Davos, Switzerland, meeting of the World Economic Forum—the epicenter of global capitalism—in January 2017, President Xi received a standing ovation from the business crowd when he attacked protectionism. No foreign power should attempt to dictate to other countries what economic path to follow, Xi said—a not-so-veiled criticism of the newly elected American president. Development should be “of the people, by the people, and for the people,” the Chinese president continued, borrowing a phrase from Abraham Lincoln’s Gettysburg Address.
As the trade battle progressed, Chinese leaders leaned on their old corporate allies. In May 2018, Xi’s vice president, Wang Qishan, who had long worked with Americans on business, met with U.S. executives in Beijing. Wang was an old hand at mixing threats and blandishments, and considered himself an expert on American politics and culture, which sometimes made him sound smug. He loved Mark Twain and Jack London novels and had exhausted the supply of Western literature, both American and European, that existed in China during the Cultural Revolution. Following China’s opening in the late 1970s, he watched American movies and television shows and was a big fan of Netflix’s Washington melodrama House of Cards.
He lectured his visitors about Chinese military strategist Sun Tzu. “If you know the enemy and yourself, you need not fear the result of a hundred battles,” he told them. China understood the United States better than the other way around and would endure far more pain rather than concede. The message: get your government to back off.
He repeated that message in a meeting with executives later in the year. He lifted his feet and showed them his Skechers sneakers to make it clear senior Chinese officials like him wanted to buy U.S. merchandise despite the trade war. (Some of the executives realized the sneakers were made in China and Vietnam.) He quizzed Walmart Inc. CEO Doug McMillon on whether the tariffs would hurt American consumers. Yes, they would feel the price increase, McMillon responded. Wang agreed.
He then turned to General Motors CEO Mary Barra for her opinion. GM’s joint venture with state-owned SAIC Motor Corporation sold 4 million vehicles in China in 2017. She used the opportunity to lobby him to lower China’s trade barriers. Chinese consumers would benefit if GM could import advanced foreign-made batteries for the electric cars the JV made in China, she said.
At the time, carmakers in China were required to buy from a “white list” of recommended domestic battery suppliers, which gave local firms a boost. But Chinese government-owned Volvo Car Group was exempted. Volvo was allowed to use batteries in its locally built cars based on more advanced technology licensed from South Korea’s LG Chem Ltd.7 The unequal treatment rankled U.S. carmakers, who felt it was yet another example of how China favored domestic firms over foreign ones, even when they were part of a joint venture. (China scrapped the list in June 2019.)
During the meeting, Wang said that trade was just one component of a broader fight between the United States and China that also included national security, geopolitical, and cultural issues. China wouldn’t be pressured or bullied. “History may show the problems of today will look like backpedaling” before both nations improved their relationship, said Wang, who was a history major in college. He emphasized that the Chinese leadership was unified and consistent, both strategically and tactically, on bilateral issues. In trying to solve the trade conflict, Wang said his boss, Xi Jinping, “is calm, clear-minded, disciplined, and responsible.”
By September 2018, the message from American business to China—that things had to change—couldn’t be mistaken. As global political leaders landed in New York for a meeting of the UN General Assembly, China’s Foreign Minister Wang Yi met with U.S. business leaders in a midtown Manhattan conference room. The lineup was a who’s who of corporate America: Evan Greenberg, CEO of insurer Chubb Ltd.; Schwarzman of the Blackstone Group; Ajay Banga, CEO of MasterCard Inc.; Alfred Kelly, CEO of Visa Inc.; and Thomas Donilon, chairman of BlackRock Investment Institute and a former national security advisor in the Obama administration.
Wang started the meeting by reminding his audience that it had been forty years since the two nations established formal diplomatic ties. “When a man turns forty, he has no doubts,” he said, quoting the ancient Chinese philosopher Confucius. Meaning? Washington and Beijing should work together and not be distracted by “the rising negative factors” in the United States, as Wang put it. Those included intelligence agency suspicions that “Chinese spies are everywhere, that even Chinese students are spies,” Wang said, and allegations that the Chinese are stealing American intellectual property. Beijing’s top diplomat was putting the blame for souring relations solely on the Trump administration.
Not so, said one CEO after another. China shares the blame. Evan Greenberg, who was also chairman of the U.S.-China Business Council, spoke first. Chinese leaders had long viewed his father, Hank Greenberg, the former CEO of insurance giant AIG, as an “old friend of China.” Evan was known in Beijing as “Greenberg Junior.”
He was direct. “The lack of meaningful implementation of reforms for the last many years is a source of deep frustration” for the U.S. business community, Greenberg said. “The latest five-year plan has further thrown into doubt the trajectory of reforms,” he added, referring to the planning document that turned Beijing’s “Made in China 2025” technology development blueprint into a government priority.
The U.S. business community was very much on board with the Trump administration’s effort to take China to task for unfair trade practices, Greenberg stressed. “There is a major trust gap right now in our relationship,” he said, and urged Beijing to take immediate steps to liberalize its economy. “This would put a floor under the current situation and we could begin to build trust,” Greenberg added.
Other CEOs backed him up. Those from MasterCard and Visa complained of the difficulty in cracking open China’s market despite repeated government promises. “We left Beijing in March with the sense that movement seemed imminent,” said Visa’s Kelly, referring to a fresh Chinese pledge to open its electronic payment market to foreign competitors, a promise Beijing had made when it entered the World Trade Organization in 2001. “Absolutely nothing has happened,” Kelly said. “It makes a difference when cabinet officials ask us what is happening and all we can say is that we have no idea. We have applications in. Just start reviewing them. Give us feedback. Tell us what we need to do to meet the needs of the Chinese government. Help us give the U.S. administration a sense that China’s markets appear to be opening.”
Blackstone’s Schwarzman recounted how he had regularly explained to China’s leadership the need to make structural changes in China’s economy to make it operate more fairly. “Too many people in the U.S. simply haven’t done well since the financial crisis and are frustrated. This kind of domestic frustration is inevitably projected onto the most successful non-American country,” Schwarzman said, referring to China. “This is not about one president or one administration. There is now a shift. Without more openness in your market, things are just unbalanced.”
Donilon, the former national security advisor now at BlackRock, wondered if Beijing understood how deeply U.S. attitudes toward China were changing. “There is a rethink under way in the U.S. about the bilateral relations. It is bipartisan, and it cuts across defense, foreign policy, and the economic arena,” Donilon said. “I fear even a decoupling in the economic and investment sphere.”
After listening to complaint after complaint, Wang responded defensively. China had been reforming, he said, ticking off a list of measures aimed at broadening foreign access to China’s markets for banking, securities, auto, and other sectors. He also pointed out that China had slashed tariffs since its WTO admission. “The pace of China’s reform and opening up is very rapid and faster than that of any developing country,” Wang said. “I understand how you feel. I understand the sentiment, but facts are facts. We just started running a marathon and are twenty kilometers behind you.”
China will continue to reform, Wang said, referring to Xi’s promises to widen market access for foreign investors. “Our highest leader speaking for our entire central government and party said this,” Wang said. “You know it is characteristic of China that if we say we’re going to do something, we are going to do it.” Watch what we do in the next three to five years, he said.
American business executives were tired of waiting. Two months later, former Treasury Secretary Paulson addressed a meeting of global corporate executives organized by Bloomberg in Singapore to discuss China issues. “How can it be that those who know China best, work there, do business there, make money there, and have advocated for productive relations in the past, are among those now arguing for more confrontation?” he asked. “The answer lies in the story of stalled competition policy, and the slow pace of opening over nearly two decades. This has discouraged and fragmented the American business community.”
“An economic Iron Curtain” may be descending, Paulson warned, “one that throws up new walls on each side and unmakes the global economy as we have known it.”
* * *
Beijing and U.S. companies did align on one issue—opposing tariffs. U.S. companies felt the pain of higher prices and lost sales as much as Chinese firms did. Beijing worried that the trade war would batter its economy. U.S. firms worried that they would be maimed, too.
American trade associations opposed tariffs with the enthusiasm they usually reserve for free trade deals. This time, though, the big three corporate trade groups played secondary roles. The Business Roundtable, National Association of Manufacturers, and U.S. Chamber of Commerce opposed tariffs, but they didn’t join a coalition of more than 150 trade groups organized to fight them. Instead, they sought good relations with the Trump White House and continued to lobby for a pressure campaign to get China to make economic changes.
The anti-tariff effort involved two different groups. One was led by farm organizations, including the American Farm Bureau Federation, the American Soybean Association, U.S. Apple Association, and the Corn Refiners Association. They worried that Chinese retaliatory tariffs slashed farm exports and forced Beijing to buy agricultural products elsewhere. The United States could lose China altogether as a market. They took the name Farmers for Free Trade.
The second lobbying push was headed by retailers, technology groups, and manufacturers concerned that U.S. tariffs on Chinese goods would drive up their prices and drive away buyers. They included the National Retail Federation, the Toy Association, the American Petroleum Institute, and the Consumer Technology Association. Their group was called Americans for Free Trade. The two worked together under the name Tariffs Hurt the Heartland.
The lobbyists figured that the White House would listen most to farmers, given Trump’s political dependence on rural America. They spent $2 million on three thirty-second television ads in 2018 that ran on Fox News, Fox & Friends, Lou Dobbs Tonight, and other cable shows in Washington, D.C. There was nothing subtle about the campaign. It sought to influence President Trump by advertising on the shows he watched.
The ads featured a Montana wheat farmer, an Indiana soybean farmer, and a Pennsylvania apple grower. In the soybean ad, Brent Bible from Lafayette, Indiana, climbs into a big green John Deere tractor and fingers a handful of soybeans. China is his top soybean customer. “Our farms and many others like it will be one of the first casualties of a trade war,” he says, looking into the camera. “President Trump, support free trade and keep the ag economy strong.”
Afterward, the coalition spent another $1.5 million through the fall of 2019 organizing town hall meetings in states that are crucial to Trump’s reelection, including Ohio, Pennsylvania, Wisconsin, and Iowa. Farmers and businesses talked about how the trade war was hurting them. Local newspapers and television stations covered the events and produced sympathetic accounts.
Some free trade campaigns have had budgets ten times as large as the anti-tariff effort. But the trade groups weren’t ready to spend that kind of money to run television ads around the country. Organizers said that could make the anti-tariff campaign an important part of the 2020 election. If successful, the groups could anger the Trump White House and get Democrats elected, an outcome their members weren’t sure they wanted. If unsuccessful, the advertising spree would reinforce how unpopular China had become as a political issue.
By the end of 2019, the campaign hadn’t managed to get the White House to hold off on tariffs. When the two sides signed a limited deal in 2020, a small set of tariffs were reduced. But that had little to do with the lobbying effort. By that point, the United States was threatening to hit mainstay consumer goods like mobile phones, laptop computers, and toys. The president’s advisers realized that would be self-defeating. The vast bulk of tariffs remained in place.
“Wall Street, CEOs, and trade associations have been expecting Trump to flinch at points along this path [of tariff increases] because that is what traditional politicians do,” says David French, a senior vice president of the National Retail Federation who is one of the coalition’s field generals. “Instead of flinching, he veers closer to the cliff.”
From Lighthizer’s point of view, the groups never proposed an effective alternative to tariffs. Some wanted the United States and its allies to sue China at the WTO. Lighthizer argued that the United States brought cases against China when that made sense, but he didn’t want to give allies a veto over what the United States did. Others, including the U.S. Chamber, urged that disputes be handled by international arbitration panels. Lighthizer distrusted such reviews, which gave power to outsiders. He was also pressuring the WTO to limit the power of its appeals panels by threatening not to approve new judges.
“The only fucking arbitrator I trust is me,” he told U.S. business executives.