There’s a long way to go before Trump can declare victory in his trade war

There is no shortage of quotes by Donald Trump that his opponents have tried to use against him — few of which have so far damaged him politically, still less embarrass the man himself. But there is one which really does have the potential to cause him harm in this year’s presidential election: his claim, in March 2018, that ‘trade wars are good, and easy to win’.

That isn’t looking quite so clever now, two years later when the trade war that Trump started with China is still far from won. The deal signed today by Trump and Chinese vice premier Liu He brings a respite in hostilities, but there is a long way to go before the US can be claimed to have won, or even to have restored trade to what it was prior to 2018. China has agreed to increase imports of US goods and to reinforce rules on intellectual property. The US has withdrawn its claim that China is manipulating its currency. Although some tariffs will be cut, however, most of those imposed over the past two years on either side will remain in place.

It has been proved often enough that imposing tariffs on imports hurts your own economy, even without retaliatory tariffs from the other side. It was a clear lesson, for example, from George W. Bush’s steel tariffs of 2002 — which ended up costing more jobs in the car industry than were at the time people employed in the US steel industry. Impose tariffs on raw materials and you push out your own manufacturers’ costs. Had the global economy gone into sharp reverse last year, pulling down the US with it, it is hard to see how Trump and his tariffs would have escaped the blame. Still, if this week’s settlement leads to a phase two settlement and effective end of trade hostilities before November’s election, all will not be not lost. What has been proved this week is that China is prepared to compromise in some areas — and that Trump’s trade war is about winning concessions which may eventually bring a freeing up of trade; they are not simply a reflex action to protect US jobs. The goodwill signaled by China’s concessions is perhaps more important than the concessions themselves — it is hard to imagine that the trough of the trade war has not passed and that the two sides will move closer together from here. The president is playing a high stakes game, but it is one in which he could yet come out on top — even if he has compromised growth over the past couple of years.