WASHINGTON — What happened to Donald Trump the “America First” trade warrior?
This week, Trump abandoned a campaign vow to label China a currency manipulator. Two weeks ago, his administration proposed a mild rewrite of the North American Free Trade Agreement, which he’d previously branded a job-killing “disaster.” And his threat to slap harsh tariffs on Chinese goods has given way to a bid to mend fences with Beijing.
This hardly resembles the candidate Trump who sold himself as a pugnacious outsider, hell-bent on upending decades of U.S. support for ever-freer trade to safeguard American jobs from nations that play unfairly. The recent climb-downs suggest a new president learning that go-it-alone trade policies don’t easily work.
“The president is beginning to adjust his policies to economic reality,” says Joshua Meltzer, a specialist in international trade and a senior fellow at the Brookings Institution.
Nowhere has Trump’s shifting trade policy been clearer — or more jarring — than his reversal on China’s handling of its currency. On the campaign trail, Trump told voters that on his first day in the White House, he would label China a currency manipulator. Not since 1994 has the United States designated China a currency manipulator.
That self-imposed deadline came and went.
Far from undercutting its currency, China has been spending its foreign reserves to prop up the yuan at a time when many Chinese are pulling money from the country to invest overseas.
In an interview Wednesday, Trump bowed to reality.
“They’re not currency manipulators,” he told The Wall Street Journal.
The president’s trade stance on China has taken an even softer tone since he met last week with President Xi Jinping. Trump is seeking China’s help in dealing with an increasingly belligerent and dangerous North Korean regime.
It’s possible that Trump could still turn more confrontational on trade. He’s already withdrawn from an ambitious Asia-Pacific trade pact negotiated by the Obama administration.
Still, free-trade advocates would feel far more encouraged if the administration worked within existing trade pacts rather than tearing them up.
Adam Posen, an economist who leads the Peterson Institute for International Economics says Trump might be starting to recognize that trade is part of America’s enormously complicated relationship with the rest of the world.