President-elect Donald Trump is forming a new White House National Trade Council, his transition team announced on Wednesday, December 21, and he is tapping one of China's most insistent critics to head it. Peter Navarro, 67, is an economist and former investment adviser. He has written a number of books about China's economic and military rise and the disastrous – in his estimation – consequences for America that include "The Coming China Wars: Where They Will Be Fought and How They Can Be Won," "Crouching Tiger: What China's Militarism Means for the World" and "Death By China: Confronting the Dragon – A Global Call to Action."
The last of these, which describes the loss of U.S. manufacturing jobs to China, was made into a film in 2012. The New York Times wrote in its review at the time, "By the end of the alarming and alarmist 'Death by China' you may be asking why candidates for public office in this election year are talking about anything other than how to stop the Chinese from wrecking our economy." (See also: China, Not Brexit, Is the Biggest Problem for the World.)
That was a very different election, and the paper, which endorsed Hillary Clinton in 2016, has gotten its wish. During the campaign Trump railed against the U.S.'s persistent trade deficit with China, vowed to slap 45% tariffs on Chinese exports and declare the country a currency manipulator (for holding the yuan's value down, which is odd, given that China has blown through perhaps $1 trillion in foreign currency reserves in recent months in an attempt to hold its value up).
On Thursday, December 22, CNN cited unnamed sources saying that Trump's transition team was mulling an early executive action to impose tariffs of perhaps 5% on foreign imports.
Navarro's selection complements Trump's pick for commerce secretary, billionaire investor Wilbur Ross. In a November Op-Ed in Foreign Policy, Navarro and Ross promised that "Trump will never again sacrifice the U.S. economy on the altar of foreign policy by entering into bad trade deals." They cited two major trade developments that bookended the Clinton administration: the signing of NAFTA in 1993 and China's accession to the World Trade Organization (WTO) in 2001. They also mentioned the Trans-Pacific Partnership, a 12-nation deal spearheaded by the Obama administration that in many ways served to outmaneuver China by excluding it form an integrated regional trade network.
A statement from the Trump team called Navarro "a visionary economist" who would "develop trade policies that shrink our trade deficit, expand our growth and help stop the exodus of jobs from our shores." Trump told the Financial Times he had read Navarro's work, which "has presciently documented the harms inflicted by globalism on American workers, and laid out a path forward to restore our middle class."
According to a 2011 study by Robert Scott, China's accession to the WTO led to the loss of 2.8 million American jobs over the following decade, or 2.0% of the overall workforce; 1.9 million of these jobs were in manufacturing. In nominal terms, the U.S.'s trade deficit in goods with China grew from $83.8 billion in 2000 to $367.2 billion in 2015.
Not everyone agrees that Navarro's work is such a valuable policy resource. In 2012 the New York Times said of the film version of "Death By China," which Navarro directed, "warrants examination and discussion," but "it is also unabashedly one-sided" and "short of solutions, other than the usual 'Call your Congressional representatives.'"
Marcus Noland, an economist at the Peterson Institute of international Economics, told Reuters following Navarro's selection that a paper he co-authored with Ross displayed "the type of magical thinking best reserved for fictional realities." The pro-free trade think tank wrote in September that Trump's policies are likely to set off "a trade war that would plunge the US economy into recession and cost more than 4 million private sector American jobs." (See also, Trumponomics: Jobs.)
While Navarro's role in the incoming administration will be as an economic adviser, he holds strong opinion on diplomatic relations with China, rejecting the "One China" policy that has complicated relations among the U.S., mainland China and Taiwan for decades. The policy, which has formed the basis for an uneasy détente, holds that there is only one China, despite the fact that the mainland is governed by the Communist government and the de facto independent Taiwan is governed democratically. The U.S. switched its recognition from the Taipei government to the one in Beijing in 1978, but the Taiwan Relations Act, passed the following year, provides for recognition of Taiwan and, potentially, pledges military assistance to Taiwan in the event of an invasion by the mainland.
The Chinese Communist Party and the Nationalist Party (also Kuomintang, Guomindang and KMT) were on opposite sides of China's civil war following Japanese withdrawal in 1946. The Communists drove the Nationalists to Taiwan in 1949, but both parties continued to claim to be the rightful government of a theoretically unified China. Given the power disparity, the main risk is that the mainland will invade Taiwan in order to forcibly reincorporate it into the country. After decades of de facto independence, many younger Taiwanese have begun to think of themselves as members of a distinct nationality, in addition to – or rather than – being Chinese.
Trump threw a wrench in this delicate balancing act on December 2, when he took a call from Taiwan's president congratulating him on his win. Shortly afterward he publicly questioned the U.S.'s commitment to the One China policy, spurring China on December 15 to pluck an American underwater drone out of the South China Sea, where Beijing has sweeping territorial claims that are not recognized by the U.S. or international bodies. A Chinese ship picked up the drone only a few hundred yards from an unarmed American vessel. China returned the drone on December 20, though Trump had urged Beijing – on Twitter – to keep it.
