US President Donald Trump. Picture: REUTERS
US President Donald Trump. Picture: REUTERS

President Donald Trump is reviving his 2016 campaign playbook on attacking China, but running as the incumbent means defending a record of only limited success in rewriting the economic relationship with Beijing. 

Much of what the Trump team has laid out in recent weeks sounds like campaign promises made four years ago: stopping outsourcing and bringing manufacturing jobs back to the US, ending dependence on China for crucial inputs and supporting companies that make things in America.

“Under my administration, we’ll end our reliance on China once and for all,” Trump said on Labor Day. “And we’ll impose tariffs on companies that desert America to create jobs in China and other countries. If they can’t do it here, then let them pay a big tax to build it someplace else and send it into our country.”

Yet, despite hundreds of billions of dollars in tariffs that the US levied against China, sanctions imposed on Chinese officials and actions to restrict the Asian nation’s technology companies, the vast majority of American firms have no plans to pack up shop in China and come back to the US.

“There hasn’t been any kind of transformational shift on the part of multinational corporations away from China sourcing,” said Scott Paul, president of the Alliance for American Manufacturing, a non-partisan partnership formed by US manufacturers and the United Steelworkers. “Is 3M still making respirators in China as well as the US? Yes, they are. Does Apple have any plans to divest from China? Not that I’m aware of.”

Only about 4% of the more than 200 US manufacturers surveyed by the American Chamber of Commerce in Shanghai said they will shift any production to the US, a report showed on Wednesday. More than 75% said they do not intend to move production out of China, while 14% said they will shift some operations to other countries.

In a separate US-China Business Council survey, 87% of the more than 100 canvassed American companies said they have no plans to shift production out of the Asian nation, citing long-term confidence in that market.

‘Rampant’ cheating

While Trump’s campaign has not offered much detail on how he would bring back jobs from China in a second term, it cites other actions — such as tariffs on more than $300bn of the country’s products — as successes in dealing with what it terms “China’s rampant trade cheating.”

“The president has finally stood up to the Chinese Communist Party, the first American leader to do so,” Steve Cortes, a senior adviser to Trump’s campaign, said on a call with reporters.

One area of limited success has been the partial trade agreement signed in January. In return for some US tariff reprieve, Beijing committed to revamp its intellectual-property protections and to buy about $200bn in additional US exports over two years. While China is unlikely to reach the targets this year — partially because the coronavirus pandemic upended demand and supply chains — it has made record purchases of US beef and maize, and has reiterated its commitment to the agreement.

Even as Trump has continued to push American companies to stop investing in China, his so-called phase one deal opened up new opportunities for US financial services and insurance firms that want to do business in the country.

‘Magic bullet’

Some experts cast doubt on Trump’s ability to move jobs to the US given the track record of his first term.

“He had four years to make this happen,” said Wendy Cutler, vice-president of the Asia Society Policy Institute and an acting deputy US Trade Representative in the Obama administration. “There are no easy fixes. He broke the mould by using tariffs, thinking that would be the magic bullet.”

Still, Trump has continued to dial up the rhetoric as he tried to paint Democratic presidential nominee Joe Biden’s record as too cozy to Beijing.

“If Biden wins, China wins, because China will own this country,” he said during Labor Day remarks. Trump has also sought to shift blame for the virus, which has killed more than 189,000 Americans, to Beijing, regularly calling it the “China Virus.”

Meanwhile, Biden this week unveiled his plan to punish multinational corporations that outsource and said Trump broke his promise by failing to address the issue during his first term.

“Donald Trump makes a lot of promises. He promised that he alone could stop the offshoring in jobs,” Biden said outside a United Auto Workers union hall in Warren, Michigan, on Wednesday. “He’s hoping we just have poor memories.”

Biden’s plan to curb corporate offshoring and to renew domestic manufacturing may block companies from parking profits in tax havens, but may not do enough to make shuttered factories hum again. It uses a carrot-and-stick approach that raises taxes on a corporation’s foreign profits but rewards companies with tax incentives for moving jobs and investment back to the US.

Opinion polls

Recent opinion polls showed the two candidates are now tied on voters’ trust to handle the economy.

On Trump’s handling of China, 57% of respondents in a Gallup poll disapproved, compared with 40% who were in favour.

The president was on track to deliver an overall reduction in the merchandise-trade deficit with China until the pandemic hit that performance. Also, total trade between the two nations was steadily declining as tariffs took effect. And while employment in manufacturing climbed to a 12-year high in November 2019, the pandemic has seen more than 700,000 jobs on factory floors disappear.

“When you look at the promises Trump made on transforming trade flows and boosting manufacturing jobs, he’ll have a hard time defending his own record,” Paul said.

Bloomberg

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