Real Trade War or Art of the Deal?

A trade war with China? As it happens, I spent some time early in the week with Steve Moore of the Heritage Foundation, who has been close to Trump and who, along with Trump’s new senior economic adviser, Larry Kudlow, helped fashion the tax reform bill recently enacted. He has shared with me a couple of times in recent months his private conversations with Trump on economic issues.

Steve said on Tuesday that Trump’s theory of a tariff battle with China is simple: China needs us more than we need them, and that they will blink first. We’ll see. Steve did point out that on the tax reform bill, all last year Trump demanded a 15 percent corporate tax rate, and we ended up with 21 percent (down from 35). Steve sensibly pointed out that if Trump had opened with 20 percent, we’d have likely gotten 25 percent instead of 21 percent.

Coincidentally also on Tuesday I was on a lunchtime panel at Berkeley Law School with Ken Starr, talking to a large crowd of law students about the history and problems of special counsels and the old independent counsel statute that Starr helped kill off for good.  (Starr didn’t take my bait of praising him for his Machiavellian deed of showing Democrats that independent counsels could be used against Democrats and not just Republicans as intended.)

The end of last week, you may recall, was filled with a flurry of talk that Trump was itching to fire Mueller, and had for the first time started mentioning Mueller by name in his tweets. Starr thinks Trump has no intention whatsoever of firing Mueller, but that Trump’s tweets and the frenzy he has ignited about Mueller is all part of Trump’s “art of the deal” method—in this case, bringing pressure to Mueller to speed the whole thing along to a conclusion.

Maybe Trump’s “art of the deal” will work out in China trade and Mueller, but those tactics are less effective if everyone thinks that’s what you’re up to. It’s one thing to deal with Congress over taxes—they’re easy marks—but Trump may underestimate one thing Chinese Communists and American lawyers have in common—they’re both exceedingly stubborn and willful kinds of people.

This could all drag on a long while.

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