Donald Trump's China deal is his hedge against impeachment damage

US President Donald Trump | AP/PTI
Hours before the seven House Democrats managers marched articles of impeachment across the Capitol last week, US President Donald Trump secured what he’s relying on to counter any political damage — a cease-fire in the trade war with China.

With little chance the Republican-controlled Senate will convict him on two articles of impeachment, the greatest danger to Trump is that the proceedings present an unfavorable portrait of the president durable enough to sway Americans against his re-election 10 months later. 

His hedge is the phase-one trade deal with China he signed on Wednesday. By calling a truce in a trade war that has dampened economic growth — historically one of the most powerful engines of support for incumbent presidents — Trump won what he’s counting on as a key element of his case for re-election. 

The signing ceremony coincided with the House vote to formally submit two articles of impeachment to the Senate for a trial, and he pointed out the juxtaposition to some of the GOP lawmakers at the event.

“This is a big celebration. And, by the way, some of the congressmen may have a vote, and I don’t — it’s on the impeachment hoax. So, if you want, you go out and vote,” Trump said to laughter as a delegation from China stood behind him.

It was a bit of stage management to show him at work on the economy just as the impeachment proceedings were about to commence, and he’ll have an opportunity for a repeat performance as the Senate trial is underway when he signs legislation implementing the US-Mexico-Canada trade agreement.

The trade conflict with China has been slowing down the economy just as the stimulus from Trump’s 2017 tax cuts and government spending increases fades, with election-year growth forecast to drop to 1.8 per cent from 2.3 per cent in 2019. Moreover, the tariff dispute has hit manufacturing especially hard, a critical contributor to the economies of Rust-Belt battleground states and even more important in counties that backed Trump in 2016.

Workers’ wages also have started slowing. After inflation, average hourly earnings in December were up only 0.6 per cent from a year earlier. Crucially for Trump, it is the trajectory of the economy that typically matters most for a president’s re-election, so a slowing economy works against him, though, of course, that is better than slipping into recession.

Trump’s standing in the polls has departed from historic norms in tracking the economy, with his job approval rating never topping 46 per cent in the Real Clear Politics average of polls despite a growing economy throughout his presidency. With unemployment low, Democrats have concentrated their fire on economic inequities, including dislocations caused by the trade war. As Trump celebrated the deal, some of the Democratic presidential candidates assailed him for achieving little despite a costly struggle.

“True to form, Trump is getting precious little in return for the significant pain and uncertainty he has imposed on our economy, farmers, and workers,” former Vice President Joe Biden said. The deal “won’t actually resolve the real issues at the heart of the dispute.”

The China accord doesn’t eliminate the negative impact of the trade dispute because Trump is continuing his existing tariffs covering $360 billion a year worth of Chinese goods. 

Those levies reduce economic growth and have particularly hurt manufacturing companies, with US industrial production down 1 per cent over the past year. But the trade deal ends the threat of tit-for-tat tariff escalation and lifts some of the uncertainty businesses have faced. It also promises an immediate stimulus for Trump’s rural supporters through China’s commitment to increase agricultural imports from the US, even if many analysts doubt the Asian nation will reach $40 to $50 billion in annual purchases the president has promised.

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