Who Controls America's China Policy?

Robert Lighthizer, the recently appointed U.S. trade representative, has one year to investigate allegations against China for unfair trading practices. This is widely acknowledged as the Trump administration’s most important step taken to implement its trade agenda. The investigation represents more than a new direction in our economic and foreign policy: It’s also part of the latest shift in an ongoing jockey between business, military, and political leaders for national pre-eminence in these matters.

The order, under Section 301 of the 1974 U.S. Trade Act, opens a fast track for the president to “take all appropriate action … to obtain removal of any [trade] practice that is unjustified, unreasonable, or discriminatory, and that burdens or restricts U.S. commerce.”

This little-known tool, which enables the president to unilaterally impose punitive tariffs, has rarely been used. The initiation of a Section 301 investigation reflects both a major policy shift in the U.S. position toward the global order and the changing foreign policy coalition within the White House.

Until now, President Trump’s aides have been deeply divided on trade, with adviser Peter Navarro and former strategist Steve Bannon calling for aggressive measures against Beijing. Others, like National Economic Council Director Gary Cohn, have urged caution. But this decision reportedly won broad support among the president’s ideologically diverse staff.

That’s likely because Section 301 makes the president the central decisionmaker and gives him greater leverage in direct negotiations with foreign heads of state, including Chinese President Xi Jinping. If Lighthizer concludes that China is in violation of established practices, Section 301 gives the president the power to impose retaliatory tariffs.

Since assuming power, the Trump administration has overseen a major structural shakeup of the coalition leading U.S. foreign policy. The investigation coincides with a purge of liberal internationalist advocates, felt most acutely within the State Department in a mass exodus of experienced personnel. Few high-level officials will be left to make the case for the importance of the international architecture as the appropriate setting for settling disputes.

Business elites are left to contend with Trump’s military advisers for influence. Both are unhappy with China’s growing role as a regional protector and investor in global trade and infrastructure, and see it as a major threat to U.S. business and security interests. They agree that the international architecture has not led to a successful resolution of differences. Political experts have been relegated to junior membership in this new coalition and a new generation of political advisers must adjust their views if they hope to have a place at the table.

Changing Structures

In the past, structural shakeups of foreign policy have had major implications. The U.S. foreign-policy coalition has always comprised political, military, and economic elites -- but their hierarchy and authority have changed from time to time. During the Cold War, the military had the upper hand; political elites coordinated closely, and business elites played a secondary role.

After the Cold War, the pecking order changed, with the military demoted to the third rank as business interests superseded national security concerns. Economics became a new driving force in foreign affairs. The success of the political leadership became linked to that of the business community.

But the political elite developed an additional concern. The easing of Cold War pressures enabled them to adapt a long-term strategic view of the role for international institutions such as the World Trade Organization and the International Monetary Fund, and to establish a new, economically liberal world order. This was modified after 9/11, when the military agenda again attained a higher priority. But the defenders of international institutions (for whom former Secretary of State Condoleezza Rice was a spokesperson) still dominated the political wing. Military objectives were still defined within the larger framework of liberal internationalism.

The liberal internationalists considered broad, sustained American investment in China to be a vital element of U.S. security policy and maintained that the most productive policy for the U.S. government was to make the growth of a Chinese private sector a high priority. The internationalists argued that China’s private-sector growth would produce beneficial long-term political implications because a rising business elite would embody broader interests than those of the country’s ruling military. The new middle classes would have a stake in the orderly relations with counterpart nations.

A Reaction to Disappointment

But the new political narrative of the Trump administration sees risks in providing economic support to China and reflects a disappointment with international institution building. They have seen no signs that well-resourced private business interests will eventually be in a position to challenge China’s ruling party. They believe fast growth has enabled China to unify and has enabled the Communist Party to project its strength as the leader of an economically transformed country.

Instead of supporting a liberal world order, China seems to be seeking a world order built around its own principles. Secretary of Defense Jim Mattis and Gary Cohn have argued that striving for security by establishing a global regime of democratic nations is a chimera.

The business lobby within the administration sees the risks of turning China into a Cold War enemy and is hesitant to engage in a trade battle. If Trump acts unilaterally, they ask, what is to stop Chinese policymakers from enacting their own unilateral Section 301 process? So far, Beijing’s approach has been to challenge its grievances with American trade policy at the WTO; but they frequently lose. The business lobby understands that if we operate outside the norm, China will follow suit.

There is no one at the table to speak for the continuing importance of the global order. The internationalist political wing has been pushed out, and in the future, the foreign-policy dispute will be between the business and military sectors. If the U.S. business community eventually finds itself upended, we could shift back toward familiar Cold War rhetoric and containment policies that will feed the antagonism between Washington and Beijing.