Trump Confronting China on Trade Sets Up Corporate Backlash Risk – Bloomberg
These companies have more than $228 billion in China investments at stake in the event of a trade conflict between the world’s two biggest economies. Their track record of pushing back against Washington on trade indicates they’ll back their own interests — and thus China — if enmity erupts.
A trade confrontation between China and the U.S. would ripple across the globe, potentially disrupting China’s vast chain of suppliers throughout Asia along with the price of consumer goods it exports to markets from New York to New Zealand. While Trump is determined to cut into the huge U.S. trade deficit with China, American companies are desperate not to lose ground to competitors in one of the world’s fastest-growing consumer markets.
“There will be a strong lobbying effort by American businesses and the markets will also wake Trump up,” said James McGregor, Shanghai-based author of the 2012 book “No Ancient Wisdom, No Followers: The Challenges of Chinese Authoritarian Capitalism,” who has worked in China since 1990. “If the stock market sees that Boeing, the auto companies, the technology companies, the agricultural conglomerates are all going to be severely hit by this they are going to take a big tumble.”
The U.S. Chamber of Commerce and other pro-trade groups have influential allies among Republicans who lead both chambers of Congress. While many say they are willing to consider Trump’s proposals, including to recraft some trade deals, they also say they’ve long seen benefits to free trade in their home states and to the U.S. economy.
“My state is the No. 1 exporting state in the nation, and not coincidentally our economy tends to be doing better than a lot of the rest of the country,” John Cornyn of Texas, the No. 2 Senate Republican, told reporters this month. Cornyn, who leads the Senate Finance subcommittee on trade, said he views Trump’s campaign promises on trade as the starting point in a debate.
“It’s a conversation,” he said. “Nobody gets to set the agenda unilaterally around here because of the separation of powers.”
In a video-taped speech last week, Trump vowed on day one of his presidency to issue a notification of intent to withdraw from the 12-nation Trans-Pacific Partnership, which he described as “a potential disaster for our country.”
For a QuickTake on China’s trade deal ambitions, click here
The U.S. Chamber pulled few punches in criticizing Trump during the campaign. In March, its president, Thomas Donahue, said Trump had “very little idea” of what trade actually was. And in June the chamber used Twitter to critique in real time an economic address Trump gave, saying his proposals for tariffs would cost millions of American jobs.
Since the election, the business group has stressed areas of agreement with the president-elect. Vice President-elect Mike Pence met Nov. 16 with the chamber’s board of directors, and enlisted the help of the business community and outlined opportunities for working together, said Blair Latoff Holmes, a spokeswoman for the chamber.
Business groups have a history of pushing back against Washington on trade issues with China. In the 1990s, companies including Boeing Co., Motorola Inc. and American International Group Inc. were involved in lobbying efforts in the annual battle to renew China’s most-favored nation status that gave its exports low-tariff status in the U.S. In 2011, trade groups representing companies including Microsoft Corp. and Wal-Mart Stores Inc. lobbied against legislation to pressure China to raise the value of its currency.
History is also replete with counter punches from China when punitive actions have been taken.