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THE PANGOAL REPORT
Jul 18, 2017
Evaluation of Trump’s First 100 Days of Action
Pangoal Institution Report
  • AN Gang (Senior Researcher of Pangoal Institution)
Evaluation of Trump’s First 100 Days of Action
Table of Contents
Synopsis
I. Performance Evaluation of Trump’s First 100 Days of Action
A. Gains and Losses in the Domestic Agenda
B. Delays in the Economic Agenda
C. Rearrangement of the Personnel Structure
D. Subtle Relations Between White House and Congress
E. Swings in Trade Policies
F. Unclear Diplomatic Route
II. A New Start of China-US relations
III. Prediction, Outlook and Suggestion
Author: AN Gang (Senior Researcher of Pangoal Institution)

April 30th 2017 marks the US President Donald Trump's 100th day in office.
In US political tradition, the first one hundred days of a first-term presidency are usually called the “observation period” or “honeymoon period,” during which the new leader in Washington acts with great expectations from the public and a moderate thaw in relations with Congress. The new administration tends to face little resistance, and the media usually avoids jumping to conclusions about its course and capability. Hence, the new president takes full advantage of looser constraints and favorable conditions during this period, attempting to remove as many “legacies” lingering from the previous administration as possible (if the two administrations are from different parties), delivering on the promises made during the election campaign, charting the future for the US and the world as clearly as possible, and laying a foundation for policies and performance in the first term.
On November 21st 2016, the third day after he won the presidential election, Trump unveiled plans for his first 100 days in office via video, mainly including proposals related to immigration, trade, defense policy, and the political environment in Washington. Trump pledged to “make America great again,” and beat drums for the doctrine of “America first,” attempting to restructure the US economy, trade, and foreign policies. As he stated, “whether it's producing steel, building cars, or curing disease, I want the next generation of production and innovation to happen right here, in our great homeland: America—creating wealth and jobs for American workers.”
As we head into the 100th day of the Trump’s presidency, has Trump achieved a good start? Has he proved that he could end up being a “great president”? Is it possible for Trump to create the new America that he has promised?

I. Performance Evaluation on Trump’s First 100 Days of Action
A. Gains and Losses in the Domestic Agenda
Herein is a specific assessment of Trump’s gains and losses during the First 100 Days of Action.
The US Senate voted 54-45 to approve Trump's pick, conservative jurist Neil Gorsuch, to the Supreme Court, handing Trump the biggest win of his term thus far. The outcome maintained a conservative majority, which was the new administration’s priority goal. For the confirmation, the Republicans holding the majority in the Senate triggered the so-called “nuclear option,” which lowered the number of votes required to confirm Supreme Court nominees to fifty-one from sixty. The newly-minted Justice Gorsuch brings the Supreme Court back to a 5-4 conservative-liberal split, which is of great and profound political significance to Trump, the Republicans, and shifts in US society. Predictably, there will be more conservative decisions on judicial cases regarding legalization of gay marriage, Obama’s immigration action, clean energy plan, abortion, police enforcement, race, applicability of death penalty, etc.
The failure of the new healthcare reform bill is Trump’s biggest defeat after he took office. The Trump administration and the Republicans introduced the health care reform proposal to overturn the Obama administration's policies. According to their agenda, the first issue to tackle would be the new healthcare reform bill, followed by a plan for tax reform. The health care repeal bill was hastily introduced on March 8th, mostly aiming to scrap certain parts of Obama’s Affordable Care Act (ACA), while retaining two specific clauses, namely, banning insurance companies from denying coverage to patients, and allowing children to stay on their parents’ plans until they are 26. Hence, the bill was “a scaled-down version of ACA.” Conservatives accused the Trump administration of not being tough and quick enough in removing Obama’s influence on healthcare reform; yet, if Trump succeeded in appealing the ACA, the underserved populations who have been supporting Trump might be the first to bear the brunt of the repeal and lose their healthcare. This, as a result, would inevitably undermine the foundation of Trump’s presidency. On March 24th, the US House Speaker Paul Ryan told Trump that there were not enough votes for the Congress to pass the Republicans’ healthcare bill, and the bill was removed from the vote before the House of Representatives could vote. Then, President Trump declared a halt to the efforts to revise the Obamacare Affordable Care Act, dropping his biggest campaign promise. However, reforming “Obamacare” cannot resume immediately, so Trump awaits the Democrats’ cooperation. The frustration over the new healthcare reform has not only unveiled the Republicans’ scheme of creating anti-Obama issues over the past seven years, but also significantly added to the difficulties for them to maintain their majority in the 2018 midterm election.
The second biggest victory during the First 100 Days of Action lies in the improvement in the efficiency and effectiveness of the administration. Trump has introduced a total of twenty-five executive orders, including cutting government red tape, tightening US borders, approving adding 10,000 more Immigration and Customs Enforcement officers and 5,000 more border patrol agents, withdrawing from the Trans-Pacific Partnership (TPP), clearing roadblocks to the construction of the Keystone XL Pipeline of the Dakota Access Pipeline, proposing in his first budget to increase military budget by 54 billion USD, and enforcing tighter restrictions on the issuance of H-1B visas (a non-immigrant visa in the US allowing US employers to temporarily employ foreign workers in specialty occupations). Apart from these executive orders, Trump has also launched a number of actions via memorandums, statements, and determinations; Obama, in comparison, signed only 19 executive orders in the first one hundred days of his first term.
It is obvious that Trump and his administration are eager to keep campaign promises and make more achievements in the first days of his presidency, and even his biggest opponents said “he is the President of the US now.” They admitted that, whatever results his actions would deliver, Trump, among all US presidents, appeared to be the busiest one with the greatest commitment to campaign promises during the first days in office. Hence, due to Trump’s “devotion” to his presidency, reiteration of the “America first” rhetoric, and “Buy American, Hire American” policies, the bedrock of his support has remained solid.
The second biggest defeat of the Trump administration during the first one hundred days was the ineffective adjustments in immigration and border policies. Since Trump took office, he has signed two travel bans targeting several majority-Muslim countries, both of which were blocked nationwide by the US District Court Judges. However furious Trump is, he will never appeal to the Supreme Court for the bans. His determination to introduce a “Muslim travel ban” is grounded on various considerations concerning domestic politics, such as the commitment to campaign promises, efforts to fight and prevent terrorism, and decreasing competition for jobs between immigrants and native-born workers. However, restrictions targeting specific ethnic groups, which were forcefully advanced with an anti-establishment unilateral approach, are against the US Constitution and rule of law. Affecting the overall diplomatic situation, the bans have activated a set of US laws, including the US Constitution, the Federal Management Regulation, and the Convention Relating to the Status of Refugees, and triggered many disputes in the US. Thus Trump, suffering from humiliation, has lost the initiative.
Trump’s executive order on building a wall along the US-Mexico border has been in effect since late January, yet who pays for the wall remains undecided. Hence, the progress has stagnated. In Trump’s thinking, the construction of the 2,000-mile US-Mexico border wall, which may cost $12 billion USD ($21.6 billion, according to anecdotal estimates), will be partly financed by cuts in federal budgets, while the rest of it will be paid by Mexico directly or with a 20% border tax on Mexican imports. The Trump administration submitted a supplemental spending request to the Congress, asking for $1.5 billion USD this year to begin work on the wall. The request, however, stirred up opposition from both parties in Congress, so it is unlikely to be included in supplemental spending. With serious backlash against the US, the Mexican people complain that Trump attempts to tackle the US-Mexico border issue with isolation, when the problem of illegal Mexican immigrants to the US appears to have been unprecedentedly eased, and that they will try everything they can to boycott his decision during the US-Mexico dialogue and US-Canada-Mexico renegotiation of the North America Free Trade Agreement (NAFTA).
B. Delays in the Economic Agenda
During the First 100 Days of Action, the Trump administration’s economic agendas have been postponed. As a core of Trump’s economic policies, the tax reform plan will involve all US enterprises and individuals, promising tax cuts of $4.4 trillion USD. The reform plan covers both individual income tax and corporate income tax: the top individual income-tax rate would be lowered from 39.6% to 33%; the lowest income tax rate will be raised from 10% to 12%; tax relief for individuals, net income investment tax, alternative minimum tax, and even inheritance tax are to be canceled; new tax breaks for child and dependent care costs are introduced into the system; low-income families will enjoy more tax benefits..The plan aims to encourage business investment, increase people’s disposable income, prop up the aggregate demand of economy, thereby increasing the overall output, and lure overseas US enterprises back to the domestic market. Nevertheless, it may not be able to significantly boost consumption in the lower-middle class and successfully direct US enterprises to invest saved production costs in research and development. Moreover, the plan may even lead to a surge of tax cuts across the world, and damage its medium-to-long-term effect. Since the tax reform policies are too expensive and the US holds no precedents for cutting corporate tax, the administration is hobbled by significant internal division; meanwhile, as the consensus with congressional Republicans is yet to be reached, the plan is still under revision (congressional Republicans argue that the corporate tax rate should be set at 20%, and in early June 2016, they proposed an alternative plan which is cheaper than Trump’s proposal, while the Trump administration favors 15%). The plan will not be submitted for a substantive review until spring of 2018 at earliest, when Congress reconvenes. Hence, the plan is unlikely to boost the economy in the short term, and, if implemented, will take some time to begin working with economic activities.
A large expansion of infrastructure investment is one of the most important promises made by Trump during the election campaign. The Trump administration plans to carry out projects through public-private partnerships (in which private investment accounts for half of the total cost) in order to improve US infrastructure with an investment of $1 trillion in the next decade. In return for private investors, the federal government will grant an 82% tax credit. In early February, the White House compiled a list of priority infrastructure projects, which involved fifty projects to be launched in 2017. Worth approximately $137.5 billion in total, these projects focus on the expansion of railway, ports, and power generation facilities. The list is essentially a financing scheme, with an aim to encourage private sectors to invest in the government’s infrastructure projects. Hence, it has caught the interest of enterprises and local state governments. As ambitious as the plan is, however, Trump cannot bypass Congress to advance its implementation by administrative means and he must seek financial authorization from Congress. Therefore, like the tax reform plan, the infrastructure proposal will not progress until next spring. Furthermore, its implementation will put great pressure on US fiscal balance.
During the presidential campaign, Trump vowed to scrap the “Volcker rule” (a federal regulation that prohibits banks from conducting certain investment activities with their own accounts, limits ownership of and relationship with hedge funds and private equity funds, and requires them to implement a compliance program from the inside), the core clause in the Dodd-Frank Wall Street Reform and Consumer Protection Act, in order to achieve financial deregulation. As one of the basic conditions for him to win the support of Wall Street and the election, this promise is also the linchpin for the Trump administration to reconstruct US financial competitiveness on a global scale. Early in February, Trump signed an executive order which specified the core principles and rules of the new administration regarding financial regulation, and required the Department of the Treasury to review whether existing laws and regulations observe the principles and submit a report. Later, Trump signed a presidential memorandum, asking the Department of Labor to review the upcoming fiduciary rule which would have required financial advisors to put interest of their clients (retirement savers) first when investing their money. However, the 180-day delay language was removed from the released version, which made legal professionals question whether Trump had proper authorization to relax control via executive orders. Up to now, the Trump administration has not unveiled any substantive measures on financial deregulation, and the progress they have made is far less than expected by the financial world. Meanwhile, the outside world begins to worry about new uncertainties brought about by the US financial deregulation to the global financial system. The International Monetary Fund (IMF) warned that the tax cuts and financial deregulation measures planned by the Trump administration might lead to a new wave of financial risk-taking, which brought on the global financial crisis in 2008.
On March 15th, the Trump administration submitted its first budget proposal (2018 Budget Blueprint) to Congress. The proposal aims to boost defense spending by 10% to $54 billion, and increase spending in homeland security and veterans’ affairs by 2.8% and 4.4% respectively. Meanwhile, government agencies, such as the Department of State, Department of Health and Human Services, Department of Agriculture, Department of Commerce, and the Environmental Protection Agency will receive budget cuts. Among them, the most drastic cuts will be felt by the Environmental Protection Agency, foreign aid programs, and international exchange and research programs. Trump’s budget proposal reflects his idea of “seeking peace through strength,” which also raises concerns about the loss of US soft power from both the Democrats and Republicans. In the next few months, the proposal will be examined by legislative bodies. After negotiations with various opposition forces, the Trump administration will certainly pass the proposal, but it will not be intact.
At present, the US economy is in the early phase of a recovery cycle. Due to the good momentum in economic recovery, financial growth, and underlying inflation, the Federal Reserve (Fed) announced an end to the quantitative easing (QE) stimulus program at the end of 2014, and began to increase the interest rate at the end of 2015, turning to the “normalization of monetary policy” at the consolidation stage of a balance sheet. On March 15th 2017, the Fed increased interest rates by 25 basic points, raising the target range for the federal funds rate to 0.75% to 1%. This is the first interest rate hike in the US after Trump took office, and it is widely expected that there will be two more interest rate hikes this year. Since Trump won the election, the US stock has posted a new wave of surge, and a major driver of the rise is the expectation of tax cuts. Currently, instead of rushing to make achievements, the Trump administration is quietly engaging both parties in discussions over topics such as tax reform, infrastructure construction, and financial deregulation. One reason for the action lies in the economic climate of the US: the US economy is doing well and nears full employment, as the positive influence of the Obama administration’s policies for economic recovery continues, which can still support the Trump administration for a while. However, the market has been disappointed in the pace of economic reform—people are worried that if the Trump administration is slow to implement tax reform and financial deregulation, the stock market will resume falling.
The deceleration of US economy is almost inevitable, as there are inherent contradictions and conflicts in Trump’s economic policies which involve “infrastructure development, tax cuts, and rate hikes.” Infrastructure development and tax cuts may result in fiscal expansion and then constraint of the debt ceiling, and rate hikes may lead to monetary tightening, which will in turn raise financing costs. However it is true that fiscal expansion cannot run parallel with monetary tightening, no matter the economic policies. The monetary policies favored by the Trump administration aim to drive up domestic inflation and thus bolster the economic growth rate with economic and fiscal measures. Essentially, the Trump administration seeks satisfactory short-term performance at the cost of long-term economic stability, fundamentally due to the practical political need of consolidating its leading role.
The Trump administration’s economic and fiscal policies are profoundly influenced by “Reaganomics.” However, there is less room left for fiscal stimulus than under Reagan’s presidency, because the federal debt stock accounted for 30% of GDP in 1982, compared with 106% at present. Meanwhile, as the Fed starts the interest rate hike cycle, the proportion of interests paid by the US government to roll over the debt stock of GDP will increase as well. As the combined measures of Trump’s economic policies are implemented, the current growth momentum of the US economy is expected to weaken after overheating, pulling the economy back into recession. There have been alarming signs in economic data: the US non-farm payroll employment in March increased by 98,000, down from the previous forecast of 180,000; nearly 30,000 jobs were cut in retailing, while retail spending decreased by 0.2%; for the first time in seven months, the manufacturing index saw a fall; the US 10-year Treasury rate witnessed a sharp jump from 1.5% in June, 2016, and even exceeded 2.5% in March, indicating a significant decrease in bond prices.
C. Rearrangement of the Personnel Structure
The personnel structure of the Trump administration features a “3+1” model, in which different “groups” are in competition and check each other.
The first group includes the anti-establishment Republicans, led by the White House Chief Strategist Stephen Bannon. This right wing is strongly conservative, and their professional capabilities are widely questioned. Most people in this group have been assisting Trump with their anti-establishment and unconventional ideas since the 2016 election. Extreme claims could appeal to voters in the campaign, but once put into practice, they may become unfeasible. Hence, the group’s political influences have waned even before the end of the first one hundred days of action. In early April, it was revealed by the media that Bannon had been removed from the National Security Council (NSC), because he “had rarely attended meetings.” Though the change was widely interpreted as a sign that Trump was relying less on Bannon, the chief strategist is still leading a team for strategic planning in the White House. Some also pointed out that Bannon’s removal from the NSC was aimed at helping him concentrate on “top-level planning,” so that he would not be distracted by specific strategies.
The second group is the pro-establishment camp in the Republican Party, including Vice President Mike Pence, White House Chief of Staff Reince Priebus, and Director of the National Economic Council Gary Cohn. Most of them are “pragmatic globalists,” “easing Trump’s inclination towards protectionism and conflicts.”
The third group is made up by Trump’s family members, represented by his son-in-law and senior advisor Jared Kushner and his daughter and assistant Ivanka Trump. It has become clear that the couple can directly influence Trump’s final decisions on critical issues, especially those in diplomacy and business. The two are not only forging channels of effective communication between Trump and the outside, but also preventing Trump from taking an overly subversive and extreme stance on some highly sensitive social and diplomatic issues such as women’s rights, the Middle East situation, and climate change. The White House has become a family business, which is rare in US political history. As the influence of the far right in the new administration rapidly declines, Trump increasingly relies on his own family members. At the end of March, Trump tapped Kushner to lead a new White House agency called the “Office of American Innovation.” With sweeping authority, the office will report directly to Trump, overhaul the federal bureaucracy, and fulfill campaign promises, such as reforming care for veterans and fighting opioid addiction. Meanwhile, with his special relationship with Trump, Kushner seeks to further expand his power by attempting to monopolize the communications channel between Trump and the outside, and secretly competing against others such as Bannon. Behind his moves lies a long-term plan to accelerate the establishment of a new political clan in Washington. If Trump is re-elected to a second term, a new political clan will go on the stage in the US.
The other group consists of professional elites in the Cabinet, such as Secretary of State Rex Tillerson, Secretary of Defense James Mattis, and Secretary of Treasury Steven Mnuchin. It also involves Trump’s choices for ambassadors and envoys in key positions, such as Ambassador to China Terry Branstad, Ambassador to Israel David Friedman, Ambassador to Russia Jon Huntsman, and Ambassador to the United Nations Nikki Haley, most of whom have not yet assumed office. They have, more or less, built personal relationships with Trump, contributed to his victory in the presidential election, and highlighted the new administration’s roots in the military, business, and right-wing camps. However, as these people have held senior positions in the US political, military, and economic system for a long time, their pro-establishment and elitist thinking have forged a rational power which can check right-wing extremists in the ongoing operation of the new administration. In the past three months, every time Trump made inappropriate remarks or appeared unprofessional and indiscreet on various issues, they would pick up the pieces, soothe fears of the US allies shocked by Trump, and even clarify the situation to eliminate misinterpretations.
Michael Flynn, the first National Security Adviser to Trump, resigned amid controversy over inappropriate contact with Russia after 24 days in office, which is a noteworthy event during the first 100 days of action. Regarding this result, for one thing, Trump’s political opponents persisted in pushing him to clarify the matter; for another, Flynn lacked experience in responding to such attacks. But it is more of a forced decision to maintain the political security of other cabinet members, signaling a start in the personnel rearrangement of Trump’s cabinet. Later, Lieutenant General H.R. McMaster replaced Flynn as National Security Adviser, after which the NSC has appeared to be increasingly technicalized in the decision-making of US strategies.
Notably, there are tens of thousands of government employees outside the fourth group. By now, more than 2,000 appointed positions in the new administration remain vacant, among which nearly 400 senior positions which require the approval of the Senate. Generally, only the top 1% of state workers will be replaced after the change of leadership, with 99% government employees remaining the same; however, as Trump has blazed his own path to lead the government, he has decided to replace a relatively large number of government employees. Meanwhile, some public officials resigned voluntarily, because they disagree with Trump’s ideas. Despite these vacancies, most government employees in charge of internal and diplomatic affairs are still at their posts. Therefore, in the medium to long term, they will serve as the bedrock for the functioning of the US government.
D. Subtle Relations Between White House and Congress
Since Trump took office, the Republicans have held the White House, the House, and the Senate, and dominated the state government with 33 governors. Meanwhile, a conservative majority is maintained in the Supreme Court, which indicates favorable conditions for Trump’s presidency. Under the influence of the political cycle, however, it is quite difficult for Republicans to win the 2018 mid-term election while maintaining its majority in both House and Senate. Hence, Trump also wishes that his administration make as many achievements as possible during this small window, so as to lay a solid foundation for his entire presidency. At present, Trump has agreed to work together with the Speaker of the House Paul Ryan, who assumed an ambiguous attitude towards him during the campaign, selected the experienced and pro-establishment Republican Pence for Vice President, and selected chairman of the Republican National Committee Reince Priebus as his chief of staff—all of these moves are largely aimed at building a positive relationship with the Congress. However, it was then proven that the coordination between Trump and the Capitol Hill cannot be achieved smoothly: for one thing, it is impossible for the White House and Republicans to agree on every critical issue; for another, Trump has only a few real supporters in the Capitol Hill—the conditions inside the Republican Party are upsetting, let alone in the Democratic Party.
Why is that? First of all, Trump is not a traditional Republican: during the election campaign, he was a candidate with pro-establishment and populist claims, so he could work together with Republicans; but after he took office, the political divisions and differences in policies become increasingly noticeable. Secondly, the Republican Party is made up of different groups on the left, center, and right, including the pro-establishment camp, moderates, ultra-conservatives, and Freedom Caucus members, which are Republicans with roots in Tea Party who are even more radical than ultra-conservatives. For example, Trump’s health care reform failed, partly because the pro-establishment and Freedom Caucus refused to support it. Thirdly, it seems that Trump is attempting to eliminate all policies proposed by Obama and overthrow the “political legacies” of the previous administration. His moves have challenged the values of the Democrats, which has set off a wave of anger among them. As there are few common goals, the Democrats are determined not to cooperate with Trump. For the moment, there is no sign of inter-party cooperation.
Political polarization is an increasingly prominent phenomenon in US politics and society, which already appears so daunting at present. The rise of the “Trump Phenomenon” during the 2016 election was a sign of an increase in political polarization: the US blue-collar workers complained bitterly about the inability of the US government and system to protect their interests in the process of globalization, and, hence, their dissatisfaction even influenced the core of US politics—presidential elections and the clashes between values of the two parties. Under the Obama administration, the major issue concerning political polarization lay in that the two parties were incompatible with each other and the mutual exclusion might reduce the political efficiency; in the era of Trump, the major conflict in political polarization is the blue-collar workers’ battle with established interests to protect their own interests through bipartisan politics. Trump, who won the election by promoting populist ideas, must adhere to some political traditions after taking office. Over time, he will find himself stuck in between various political groups and make little progress on critical issues. Trump’s defeats during the first 100 days of action may just be “appetizers” for his presidency.
After the defeat over health care reform, the Trump administration and the Congress, with conflicting interests, may disagree with one another on many issues, and the most notable one in the next stage will be the budget controversy. Many of Trump’s campaign promises are expensive and will reduce state revenue, including tax cuts, infrastructure development, putting an end to the decline of defense spending since 2011, strengthening the Navy, and building the US-Mexico border wall. Without the support of Congress, all these promises will be only lip service. Moreover, as the US is still involved in the “grand bargain on deficit reduction,” the massive debates on the issue of fiscal budget will remain persistent during the Trump administration. During the recess from this summer to next spring, Trump must deal with acrimonious negotiations.
A potential tipping point underpinning Trump’s relationship with the Congress is the investigation into the scandal over contact with Russia. Since this January, the House and Senate have been conducting a bipartisan investigation and hearings for contacts between Trump's campaign team and Russia, with no sign of stopping.
E. Swings in Trade Policies
With the doctrine of “Buy American, Hire American,” Trump attempts to lure overseas US manufacturers back to the domestic market to create more jobs for native workers, significantly narrow the US trade deficit, and make trade more fair for the US. To do so, Trump will renegotiate established bilateral trade issues, and ensure that both parties open their markets in accordance with the principle of reciprocity. This thinking is the guideline for Trump’s trade policies.
As soon as Trump was sworn in, his administration took an aggressive stance on revising existing bilateral and multilateral trade agreements. Trump declared a unilateral exit from the Trans-Pacific Partnership Agreement (TPP), and threatened to start renegotiations over North American Free Trade Agreement (NAFTA) with Canada and Mexico. Later, he signed three executive orders, instructing relevant federal departments to investigate exemptions from or waivers of Buy American Laws, which provide foreign products with “unfair competitive advantages” in the US government procurement market, conduct a 90-day review of the causes of massive US trade deficits, assess the US’s participation in the Government Procurement Agreement (GPA) with the World Trade Organization (WTO) and other trade agreements, probe into whether imports of foreign-made steel undermine US national security, and encourage purchases of US-made steel in the government procurement market. Meanwhile, officials in the Trump administration appear to value only bilateral trade agreements in economic dialogues with key countries. All these have added to people’s fear that the US may step back from economic globalization and Trump may launch an all-out trade war as president. The cloud of protectionism is haunting the global market.
On March 1st, the Office of the United States Trade Representative (USTR) submitted the Trump administration’s first annual report on trade policy to the Congress. The report clearly states that the US will defend its “national sovereignty over trade policy,” vowing to create a more free and fair trade environment for the US. Meanwhile, the report holds that the US will consider triggering Section 301 of the Trade Act of 1974 and conduct new negotiations over the trade agreements. It also emphasizes that, in order to boost the economy, create more jobs, and strengthen the foundation of manufacturing, the US will enforce its laws firstly to address trade disputes, without being subject to any WTO verdicts; they will harshly respond to any unfair trade which improperly disadvantages US industries and workers; even if the WTO members’ decisions on disputes contradict the US claims, they will not automatically change US domestic law and business norms.
Although the news is spreading and the investigation is about to start, the Trump administration still has neither defined a specific, clear, and systematic new trade policy, nor identified the priorities in their trade policy agenda. A civil war has broken out within the White House, setting a faction including Director of the National Trade Council Peter Navarro and Secretary of Commerce Wilbur Ross against the other faction led by Gary Cohn and Steven Mnuchin. Just as the US media reported, this is a division between “trade hawks” and “trade doves” over how to tackle trade disputes: extremist means or moderate ones? The US Chamber of Commerce has been actively persuading Trump to think carefully before expanding the “Buy American” program, as it may threaten US access to export markets. Over time, Trump is increasingly inclined to avoid extreme measures, especially in regards to the trade relationship with China as he publicly and repeatedly denies the possibility of a trade war. In the future, Trump’s trade policy may deliver the following features: holding the US laws above WTO rules, tightening investigation and law enforcement concerning foreign trade, and securing more market shares for US goods through renegotiations or negotiations over trade agreements.
At the same time, Trump is seriously considering adjusting border taxes. If the adjustment becomes an important part of the US tax reform, it will “strike at the heart of the trade deficit.” According to analysis and assessment by Deutsche Bank, once the policy is implemented, it will levy one more tax on exports to the US from all other economies with a rate equaling that of business income tax, while US exports to other countries do not have this tax. Hence, Deutsche Bank estimated that the imports into the US could be 20% more expensive and exports 12% cheaper, and due to the changes in prices of imports and exports, the US dollar could depreciate by 15%. At present, the import duty rate and average consumption tax rate in the US add up to only 9%. Hence, Trump may be hesitant to adjust the US border tax; though it can expand the US exports and reduce imports in the short term, the policy may infuriate many countries around the world and draw back US multinational enterprises dramatically, which is detrimental to the sound development of US economy in the long run.
F.Unclear Diplomatic Route
During his first one hundred days in office, Trump increased efforts to handle US relations with countries in the Middle East, Europe, and the Asian-Pacific region, and its American neighbor. Senior officials of the Trump administration, including Vice President Mike Pence, Secretary of State Rex Tillerson, Secretary of Defense James Mattis, National Security Advisor Herbert Raymond McMaster, and Senior Adviser Jared Kushner have visited Europe (NATO Headquarters in Brussels, Germany, and Russia), the Asian-Pacific region (Japan, South Korea, China, Indonesia, Australia and Afghanistan), and the Middle East (Saudi Arabia, Egypt, Qatar, Djibouti and Iraq). Donald Trump met with leaders from the UK, Japan, Israel, Canada, Germany, Iraq, Egypt, Jordan, China, and Italy in Washington and Mar-a-Lago, the “Southern White House,” and maintained close contact with leaders from many countries via phone. In addition, Trump’s first foreign trip to Europe (the UK, NATO Headquarters, and possibly France) in April and May is still being planned.
As for Trump’s diplomatic approach, it is highly inconsistent and contradictory in several areas. US political scientist Francis Fukuyama said on a meeting in Taipei on April 15 that 5%~10% of Trump’s attention was placed on Asia, while 90%~95% was placed on Russia and the Middle East.
Firstly, the Trump administration promotes a strength-based diplomatic approach. Trump is committed to restoring US military forces with an emphasis on the construction of US naval forces. One of the key agendas is to increase US naval ships from 274 to 355, and step up forward deployment in the Asian-Pacific region. The Center for Strategic and Budgetary Assessments (CSBA) released a report titled “Restoring American Seapower: A New Fleet Architecture for the United States Navy” on February 9th, suggesting that “today’s approach of using large, high-end platforms such as aircraft carriers to support the whole range of naval operations will not be effective at providing the prompt, survivable, high-capacity firepower... It may be better to rely upon submarines and surface combatants as the primary instruments of deterrence and reassurance and deploy aircraft carriers from the open ocean…”
Secondly, the Trump administration prioritizes the rearrangement of relations with its allies and partners, and comprehensively backs away from Trump’s aggressive challenge to orthodox US policies and advocacy of walking away from excessive obligations to US allies made during his presidential campaign; however, as he pursued this goal, Trump did not abandon his desire for US allies to take on a larger share of costs from this military security coordination. Trump’s withdrawal from campaign rhetoric on alliance policies, part of foreign military strategies, largely resulted from proactive actions taken by US allies, including Japan, South Korea, the United Kingdom, and Saudi Arabia. This shift in actions is driven by basic attributes and powerful traditions in American security interests. Trump is well aware that “peace-through-strength” diplomacy will not gain momentum without a solid alliance system. Despite this, Trump has demonstrated his strong likes and dislikes regarding different US allies, drawing closer towards countries such as the UK, which also favors conservatism, de-globalization, and right-leaning policies, and alienating countries such as Germany with steadfast adherence to liberalism. It is a spontaneous expression of political preferences on the state level, and it will influence the focus of US foreign policies in some regions and the overall rightist trend of Europe.
Thirdly, the Trump administration intervenes more than anticipated in the Middle East. Trump did not demonstrate any interest in Middle Eastern issues during the presidential campaign and the period between election and inauguration. After his inauguration, Trump stated that the US should not continue to involve itself in regime changes and political reconstruction in the Middle East, which are generally arduous and fruitless, and that the US should, instead, concentrate on defeating extremist forces such as ISIS. Furthermore, he was prepared for US-Russia coordination in the Syrian issue, gave up the goal of overthrowing the Assad regime, and made plans for safe zones in Syria. In no more than two months, however, the situation has changed fundamentally. On April 7th, with the approval of Trump, the US navy launched cruise missiles to carry out a “surgical attack” against the air base owned by the Syrian government army in Hims, in response to their “use of chemical weapons” and massive civilian casualties such use caused in Khan Sheikhoun.
Regarding Israel-Palestine relations, Trump decreased support for the “two-state” solution and restrained himself from an ambiguous attitude towards settlement expansion. At the same time, he shelved the consideration of moving US Embassy in Israel to Jerusalem and set out to negotiate with Middle East allies to promote the Middle East peace process. By beginning Israel-Palestine peace talks at such an early stage, he has broken the tradition of his predecessors, who typically promoted the process vigorously only at the end of their presidency. Perhaps Trump draws a lesson from his predecessors, whose attempts always failed on the eve of success. In making early arrangements, the odds of being “crowned with eternal glory in history” will be amplified.
With the Iranian nuclear issue, Trump signaled his stance early on and imposed unilateral sanctions against Iran for its missile tests. Yet, instead of abandoning the Iranian nuclear agreement which he advocated during his presidential campaign, Trump showed readiness to implement the agreement.
Trump indicated renewed interest in the post-war reconstruction of Iraq, which is mainly influenced by a large number of security advisors who once served in the Iraq war or were directly engaged in intelligence operations during the war.
Trump originally supported a withdrawal from the chaos in the Middle East as he saw appropriate to reduce the excessive use of foreign strategy resources; however, in practice, US diplomatic efforts are entangled in the complicated situation there. When domestic political needs clash with regional strategies, Trump prioritizes the former over the latter without any hesitation, which will eventually trap him in a dilemma.
The decision to launch strikes against the Syrian government army was made within a small group of people out of concern for domestic politics. They intended to demonstrate that Trump is more resolute than Obama by showing that the US will launch strikes when Syria challenges the “red lines” of chemical weapons. In addition, it helps Trump distance himself from unclear relationships with Russia. Also, the move was intended to alleviate the impact of the fierce counterattack by the Syrian government army against rebel factions and warn against further provocations for North Korea and Iran. The decision to carry out the military attack against the Syrian government army has won Trump widespread praise in the US, and some of his political enemies also approved this move, which makes it one of the few high points during his first one hundred days in office. This move, however, has also suspended the easing trend of US policies for Syria at least for a while and interrupted opportunities for the US and Russia to develop a bilateral approach to Middle East issues. Syria, at the same time, will remain a heavy burden on the US.
Fourth, the Trump administration sets aside efforts to improve US-Russia relations. The warming of US-Russia relations was stifled due to the scandal over his top aides’ contact with Russia, the opposition from European allies, Russia’s recent aggressive posture towards Ukraine, and changes in Syria’s battlefield. In improving relations with Russia, Trump originally intended to cut down US strategic cost and, at the same time, create conditions for his administration to make headway in nuclear disarmament and stimulating US economic growth through moderately lifting international oil price. However, this plan to thaw US-Russia relations has collapsed. It appears to be the result of severe structural contradictions between the two countries, the ever-changing international situation, and the flaming hatred and fear for Russia held by US Democrats and Republicans. Equally important, though, is that US-Russia relations have been highly politicized within the US. Trump’s political enemies - including Democrats and opponents to Trump’s policies within the pro-establishment camp of the Republican Party - are clearly intending to check Trump via the scandal over his top aides’ contacts with Russia and Russia’s intervention in the US presidential campaign. Possible following scandals are a major risk haunting Trump’s presidency. Consequently, with hands bound, he cannot make substantial moves to improve relations with Russia, while Russia has taken a wait-and-see approach, a distinct departure from their earlier earnest anticipation and flattery. Meanwhile, Russia has further expanded its strategic security clout over eastern Ukraine and central and eastern Europe, as Trump cannot exercise his power over Russian issues.
Fifth, regarding issues in the Asian-Pacific region, the Trump administration prioritizes the nuclear threat of North Korea. After taking office, Trump reassessed the nuclear threat of North Korea (this process has been, in fact, put into motion since the North Korean satellite launch in February 2016 and the fifth nuclear test in September of the same year), and contended firmly that North Korea had accelerated the progress of nuclear and missile programs and extended the reach of ballistic missiles to the “threshold” of the western US coast, and as a result the US must readjust policies towards North Korea.
Against this background, the Trump administration declared that the US policy of “strategic patience” during the Obama administration had ended and Trump drew “red lines,” attempting to stop North Korea from proceeding with new long-range missile tests and nuclear tests. Meanwhile, the US and South Korea jointly staged the largest ever Foal Eagle and Key Resolve military drills, which involved various high-profile strategic weapons, such as B-1B, B-2, and B-52H bombers and Marine Corps F-35B stealth fighters. While releasing signals that it is escalating the Operations Plan (OPLAN) 5015 against North Korea and iterating that “all options are on the table” more frequently, the Trump administration declined North Korea’s tentative efforts to send its senior officials to the US for diplomatic engagement. Tirelessly and constantly, North Korea continues to probe the Trump administration via the following moves: launching short-range and intermediate-range missiles frequently; posturing that it is ready for the sixth nuclear test at the Punggye-ri nuclear test site; holding a military parade to celebrate the 105th anniversary of the birth of Kim Il Sung in a high-profile manner; and showing the KN-06 (lightening) anti-craft missiles and Pukguksong-2 submarine-launched intermedium-range ballistic missiles on the occasion. However strong a posture North Korea displays, it manages to restrain itself from going beyond the “red line” drawn by Trump, who has exercised restraint in general as well.
For the time being, neither Trump nor North Korea has the courage to stage a war on the Korean Peninsula, and negotiation remains their bottom line. The intention underpinning Trump’s “intervention after extreme pressure” strategy is to suppress North Korean posturing with military force and diplomatic approach in the first place, and utilize bilateral means to urge China to use its unique “leverage” to curb North Korea’s nuclear and missile programs. After North Korea comes back to negotiation, the Trump administration will be prepared to engage with the regime. As to how to engage in contact and what and how to negotiate – this remains unclear. It should be noted that senior officials in the Trump administration, including Secretary of State Rex Tillerson, have already made it clear that the US has no intention to overthrow or invade North Korea, and the goal of the Trump administration regarding the North Korean nuclear issue is still to urge North Korea to give up its nuclear program. It is an important policy signal, which cannot be neglected when one attempts to understand Trump’s intentions regarding the North Korean nuclear threat. Accordingly, even if North Korea is willing to come back to the negotiation table, whether it is ready to forge ahead with the denuclearization commitment made in the September 19 Joint Statement will be another critical factor in the next stage of the North Korean nuclear issue. At any rate, the US and North Korea are unlikely to make aggressive moves before the presidential campaign of South Korea is completed in May.
Sixth, the Trump administration acts on US commitment to reduce emission. On March 28th, President Trump signed an executive order on promoting energy independence to “suspend, revise or rescind” relevant rules of the Clean Energy Plan introduced in 2015 by the Obama administration, proposing that US power stations shall reduce emission by 32% from 2015 levels by 2030. Additionally, the order lifted the Federal Land Coal Leasing Moratorium and restrictions on the exploitation of oil, natural gas, and shale gas, and proposed a review of estimates of the social cost of carbon. The aim of these energy and climate change policies is to ensure that the nation’s electricity is “affordable, reliable, and clean,” and can thereby boost economic growth and create new jobs.
Next, the international community will closely follow whether the Trump administration will withdraw from the Paris Agreement, which will be decided before the G7 Summit (participants include the US, Japan, Germany, the UK, France, Italy and Canada) in May. Currently, the White House is severely divided. Ivanka Trump, daughter of President Trump, Jared Kushner, Trump’s son-in-law, and Rex Tillerson, Secretary of State believe that the US should stay committed to the Paris Agreement, while Steve Bannon, White House chief strategist and Scott Pruitt, head of the Environmental Protection Agency (EPA) support the withdrawal. Traditional energy companies, including the Shell Group of Companies and Mobil, and intellectuals are strongly against the possible withdrawal from these climate change measures. It is generally acknowledged that Trump can hardly make the decision to withdraw from the Paris Agreement in disregard of outside voices, which means he will renege on one more of his presidential campaign promises. It is also recognized that the US will not be able to completely fulfill its commitment to reduce emission as scheduled, even if the country does not withdraw from the agreement, indicating that major developing countries, including China and India, will undertake a larger share of leadership roles in coping with climate changes.
In summary, during his first one hundred days in office, President Trump continues to highlight doctrines of “America First” and “Make America Great Again” and adheres to the principle of “peace through strength” in his diplomatic efforts. However, without clear strategic clues and policy thoughts, most of his policies are expedient and fact-guided; most of his decisions are made hastily, driven by the needs of domestic politics. In practice, his efforts are hindered and diluted by a complicated reality, facing both the ever more complicated international arena and constraints inflicted by domestic political forces. By highlighting orientation on domestic policies, the Trump administration prioritizes domestic interests and restrains itself from obsession with global leadership. Instead of paying more efforts, it prefers to fight for its own interests against other countries. The Trump administration tries to determine the most acute threats to American interest and launch precision strikes, while considering several issues at the same time. The administration values cost-effectiveness and considers any policy options that may achieve substantial outcomes. However, it is true that Trump advances his first 100-day plan more smoothly and steadily in diplomacy than in domestic politics. To put it another way, in international affairs, Trump draws closer towards American traditions more rapidly than in other areas, and US diplomacy is more likely to attain stability than other areas. Two factors may explain this phenomenon; Trump’s diplomatic team functions as professionals; furthermore, the new president realizes the role of diplomatic rules rapidly as he is engaged in more and more diplomatic activities and therefore becomes increasingly pragmatic within the limits of those rules.
II. A New Start in China-US Relations
China-US relations are expected to be unstable whenever a new US president takes office, because of the inertia of strong postures in the presidential campaign, the need to prioritize domestic affairs over foreign issues, and the fact that two sides must grow acquainted with each other. Since the establishment of China-US diplomatic relations, China-US ties have witnessed six leadership transitions in the US. Although the two countries, driven by common interests, have always successfully brought the relations back on track, addressing frictions and building trust is often delayed, which greatly reduces the efficiency of bilateral cooperation during a president’s tenure. The only exception is when Barack Obama took office, and China and the US managed to handle the transition smoothly and rapidly. One reason for this is that China-US relations were more mature by then, and that the Obama administration needed China’s help in its eagerness to stimulate economic recovery.
During his presidential campaign, Trump bashed China’s trade policies and threatened to launch trade wars with China, labelling China as a “currency manipulator.” After winning the election, he spoke with Tsai Ing-wen on the phone and challenged the “one China policy,” generating great backlash. These factors jointly triggered suspicions and concerns over China-US relations, which was drawn into enormous uncertainties.
However, this discouraging and uncertain future has been dramatically changed due to frequent contact and positive interaction between the two sides. The US adopted both traditional and flexible diplomatic approaches to eliminate the negative impact of Trump speaking with Tsai Ing-wen; Ivanka Trump, the daughter of President Trump, attended a Spring Festival celebration at the Chinese Embassy in Washington DC; the Chinese Ambassador to the US Cui Tiankai and Jared Kushner held a closed-door meeting; President Trump sent new year greetings to Chinese President Xi Jinping and reiterated US adherence to the “one China policy” in a later phone call. Next, senior officials of the two countries’ diplomatic and economic teams have engaged in communications through multilateral meetings, bilateral visits, and telephone conversations. For instance, Vice Premier Wang Yang spoke with US Treasury Secretary Steven Mnuchin on the phone; State Councilor Yang Jiechi paid a visit to the US; Chinese and US foreign ministers met in Bonn, Germany; US Secretary of State Rex Tillerson paid a visit to China. During his first visit to China on March 18th and 19th, US Secretary of State Rex Tillerson clearly noted two separate times that the US was willing to work with China to build a positive relationship that featured no conflict, no confrontation, mutual respect, and win-win cooperation, echoing China’s proposition for a new model of major-country relations. Although the sincerity of the US stance must still withstand the test of time, it is still an important signal indicating that the Trump administration is drawing closer to US diplomatic traditions in handling China-US relations.
On April 6th and 7th, the meeting between Chinese President Xi Jinping and his US counterpart Donald Trump in Mar-a-Lago, Florida was held successfully. The first meeting between two heads of state only took a bit more time than during the Obama administration (on April 1st 2009, President Hu Jintao and President Obama met for the first time on the occasion of G20 summit in London). According to the schedule of international conferences in 2017, the heads of the two countries will not have their second meeting until the multilateral event of G20 Hamburg Summit in Germany in July. Both sides are unwilling to wait so long for the first meeting , because China-US relations are becoming increasingly important. Amid mounting global uncertainties, hot-spot issues in the Asian-Pacific region, especially escalating tensions on the Korean Peninsula and heightened risks of a China-US trade war, the two sides find it difficult to put agendas of bilateral relations in motion, and they also cannot make appropriate political decisions to address sensitive issues and ease tensions, if heads of the two countries fail to meet early and often enough. Moreover, China-US relations are of special importance to the governing agendas of the two countries. This “special importance” is underlined by the special situation in 2017, which is a critical year for both China and the US. The 19th CPC National Congress will be held this year in China, and the Trump administration wants to begin an impressive first trim by boosting the US economy and advancing domestic social reforms. Neither China nor the US could push forward their domestic agendas smoothly if China-US relations do not proceed smoothly.
It should be noted that the transition period is no longer completely dominated by the governments, which was once a traditional practice. Instead, social forces in the two countries, including think tanks, scholars, and the business circle, also made tremendous efforts to promote the meeting. Some channels made progress where government sectors and government-backed academic institutions found limited access, which provided important information and clues to the official decision-making process. This phenomenon indicates that more and more social factors are playing an ever more important role in China-US relations and demonstrates the public attitude towards China-US cooperation.
The meeting in Mar-a-Lago exerted positive influence on the stable development of China-US relations.
First of all, President Xi Jinping and President Trump met in a relatively short time during the transition period of China-US relations and made the third and fourth telephone conversations respectively four days later on April 24th. In this way, they have fostered a sound personal friendship and working relationship, and set a precedent for frequent high-level meetings and direct communication. They have also made plans for Trump’s state visit to China in 2017, reducing mounting uncertainties in China-US relations since Trump won the election.
Secondly, the two heads of state exchanged opinions on how to further develop China-US relations over the next forty-five years and identified a common ground, that is, as two major countries in the world, China and the US shoulder great responsibilities and cooperation is the right choice. Also, it is recognized that both countries should enhance communication and coordination to achieve greater development through concerted efforts and the two countries can become excellent partners.
Thirdly, this meeting built the basic framework for China-US dialogue in the new era and identified four pillars, which are diplomatic and security dialogue, comprehensive economic dialogue, law enforcement and cyber security dialogue, and social and cultural dialogue. Progress was made in the military dialogue mechanism (such as the joint staff dialogue mechanism to be built) as well. This arrangement will help both countries focus on key issues, improve the efficiency of dialogues and deepen them, and conform to the multi-issue and cross-field trend of the world.
Fourth, the two heads of state also introduced each other's agendas for ongoing domestic and foreign priorities, and exchanged opinions on trade and commerce and the North Korean nuclear issue in a candid manner. They focused on the most urgent challenges to bilateral relations, global trade, and regional security in a highly practical manner. China expressed its sincerity to strengthen Chinese investment in the US to facilitate domestic reforms there and create more jobs. One meeting cannot solve all the problems in China-US relations. Still, it has lowered the risk of relevant conflicts escalating into confrontation. More importantly, it has charted the course for future coordination for the two countries.
Fifth, the meeting has further deepened the Trump administration’s understanding of issues concerning China’s core interests, such as the Taiwan issue and South China Sea disputes, thus flattening and narrowing their learning curve. It has also brought relevant issues back to the controllable and negotiable track. Although Trump did not reiterate the remarks of Secretary of State Rex Tillerson in response to China’s proposition for a new model of major-country relations, he still emphasized the importance of respecting each other’s core interests, which signaled a progress in the US perception of bilateral ties.
Sixth, the Xi-Trump meeting highlights how Chinese and US presidents understand each other’s beliefs regarding state governance and how they intend to handle bilateral ties rationally. This deescalates concerns and anticipation for China-US conflicts, narrows space for certain international players to sow division between the two countries to serve their own interest, and adds a positive force to the development of global trade and commerce and security adjustments in the Asian-Pacific region.
The Mar-a-Lago meeting assures the world that the US holds a prudent but optimistic attitude towards China-US relations in the future. Nonetheless, the complicated history of China-US relations has always been riddled with twists and turns, and the building of mutual trust between the two countries has witnessed ups and downs as well, which is especially true amid the new international situations and the currently volatile period in US domestic politics. We should not be blindly optimistic, nor should we play down the variables in China-US relations during Trump’s presidency.
The Mar-a-Lago meeting did not set the final tone of future China-US relations or the security situation in the Asian-Pacific region. In the next stage, the coordination of the two countries’ interests still must proceed amid difficulties in reality. The North Korean nuclear issue should be the shared top priority of the two sides. After the Xi-Trump meeting, Trump has repeatedly tweeted that if China does not use its leverage to rein in North Korea, the United States will act on its own, and if China helps, trade will not be an issue. These signals indicate a carrot-and-stick strategy to shift pressure to China when Trump himself is uncertain regarding next steps, demonstrating Trump’s mindset that is he is not ready to entangle the US in conflict on the Korean Peninsula, and that he wants to support geopolitical interests with trade. If true, China must determine its course of action with diplomatic wisdom that transcends traditional thinking and the courage for active mediation. If the US remains dedicated to the goal of denuclearizing North Korea, China should work on pushing North Korea to allow denuclearization on the table as well. However, the Trump administration still harbors tactics to shift pressure to China in the North Korean nuclear issue, which is most likely to be secondary sanctions against North Korea. With implementation, their effect will spread to foreign financial institutions and companies in business contact with North Korea. The US must exercise restraint in this respect, because this move will radically undermine the atmosphere for China-US coordination.
The second major challenge confronting the two sides is the 100-day plan for trade negotiations, proposed during the first meeting between Chinese President Xi Jinping and US President Donald Trump. The 100-day plan for trade negotiations was introduced by China and accepted by the US. It is expected to not only narrow the US trade deficit with China, but also achieve the establishment of an “intermediate stop” to measure the progress. The 100-day plan for trade negotiations eases concerns in China and the US amid the mounting risk of trade wars. However, the change in traditional negotiation modes forces both sides to take full use of this period to re-coordinate interests and identify and check points of cooperation, in order to eliminate the risks of massive trade wars through making compromises. This puts heavy pressure on both countries’ administrations and presents an immediate test to the two countries’ provincial and state interests and the perspective of the overall situation.
Chances are that the US will seek breakthroughs in the iron and steel industry, the clothing industry, the machinery and electronic industry, the financial industry, and the service industry as well as the national treatment of outbound investment made by US enterprises in China. China may strengthen its efforts to urge the US to relax restrictions on the export of China’s high-tech products to the US and promote new progress in the negotiation of the Bilateral Investment Treaty (BIT) built on efforts made during the Obama administration. China may also take the opportunity of China-US negotiation to force domestic industries with high energy consumption and excess capacity to close down and change the production line. Meanwhile, in order to buffer pressure from the US on specific issues, China may expand the types and quota of imported agricultural products from the US moderately, to check and balance China-US trade relations with the procurement of US bulk commodities.
During the 100-day plan for trade negotiations, China’s central bank, the People’s Bank of China, has adopted measures to prevent sustained large depreciation of the RMB in face of the strong US dollars. Besides, in order to create an appropriate atmosphere for trade negotiations and concentrate on pressuring China on more urgent issues, the Trump administration will discontinue threatening to label China as a “currency manipulator.” However, the accusation of China adopting various explicit or implicit subsidies to support and protect Chinese exports to the US will not come to an end.
At present, after the 100-day plan for trade negotiations, China and the US should be able to avoid massive trade wars. Besides active bilateral coordination, this forecast is also based on the good momentum shown by the US economy, which is still growing from adjustments made by the Obama administration in its later period. In other words, the US does not have an immediate urgency to stir up trade frictions. Still, small trade frictions in certain areas will still be inevitable, including bilateral anti-dumping and countervailing investigations and litigation within the framework of WTO, which has in fact been taking place on a regular basis over the years.
In the medium to long term, Trump’s fiscal and monetary policies do not match, and short-term stimulus measures, including corporate tax relief and large-scale infrastructure construction, can hardly be put into practice. The US economy will remain fluid if asset prices shrink, the stock market and the exchange market see large swings, the energy market makes major adjustments and the proportion of rigid spending in the federal government budget exceeds the ceiling of the macro economy. The intention to find a “scapegoat” for risk and pressure transfer may re-emerge, and China-US trade disputes may become grave again.
In the coming years, economic issues will become the core part in China-US relations. The two countries should be adequately prepared to address the danger of the mutual spillover of financial risks quickly and effectively, rather than merely monitor trade issues. At present, the Federal Reserve adopts a three-step policy—lifting quantitative easing completely, increasing interest rates gradually (at least two more in 2017), and narrowing the size of the balance sheet. It shows a tendency to adopt a harsher tightening policy, which will inevitably have a sustained spillover effect and exert great impact on China’s monetary and exchange rate policies. For China, whether it is capable of handling financial vulnerability arising from excessive credit growth will have immediate impact on the stability of the global financial market. At the very least, China and the US should engage in communications and negotiations in both trade and finance on both micro and macro levels. Coordination and compromise in trade issues beyond a unilateral effort will reflect comprehensiveness, thus conforming to “comprehensive economic dialogues.” The 100-day plan for trade negotiations can be seen as a starting point to rebalance China-US economic ties.
It is widely acknowledged that Trump will create opportunities for China-US cooperation in his plan to carry out large-scale infrastructure development projects in the US, and Chinese enterprises have demonstrated strong interest in sharing equipment, techniques, financing, and management experience with their US counterparts, and China shows considerable interest in participating in investment and construction. Experts and scholars believe that such cooperation will relieve Trump’s pressure on China concerning trade issues.
It should be noted that there are indeed major opportunities for China-US cooperation in infrastructure construction. According to a proposal seeking advice drafted by the Council of Economic Advisers (CEA) and released to US states in the last ten days of January, the first one hundred infrastructure projects are mostly concentrated on transportation, bridges, and power facilities, areas in which China boasts expertise. However, these projects require the approval of the federal budget and there is no way that the Trump administration can bypass the Congress by issuing executive orders. That is to say, these projects will not come into play until spring of 2018.
Both sides should take a long-term view in regards to China-US infrastructure cooperation. China can find other ways and work on specific issues to wield the political implications influence of China-US infrastructure cooperation ahead of schedule by promoting the formulation of joint plans and setting up China-US infrastructure cooperation funds.
Both China and the US should seize this opportunity to cooperate, which will soon be gone. Since Trump was sworn in, he has demonstrated that, on the one hand, he is drawing closer to US political and diplomatic traditions more rapidly the longer he spends in office; on the other hand, Trump’s obvious merchant-like trading thinking in combination with his outspoken and daring personality is indeed changing the acts of US both at home and abroad. Hence, we should not expect Trump to behave completely normally during his presidency.
When handling relations with China, Trump manifests the thinking of interests trading on various issues. Susan Thornton, acting assistant Secretary of State, noted on the eve of her visit to China along with Tillerson in late March that the US sought a results-oriented relationship with China. The phrase “results-oriented” indicates that the US will take a practical approach to relations with China. The policy will depend on how both sides handle every issue and the results of these issues. Hence, China and the US are confronted by a realistic issue: if China and the US fail to seize this opportunity to cooperate following the first meeting between the two heads of state, will those opportunities turn into challenges immediately and lead to confrontations again? Will sensitive issues between the two countries spiral out of control? In this respect, China should be fully prepared for any unexpected developments.
The communication channel between China and the US remains narrow, because of the highly-centralized decision-making mode shown by the new American administration and the power struggle of different circles within the administration. Apart from Jared Kushner, Trump’s son-in-law and adviser, China remains uncertain as to how many channels are available for direct communication with President Trump. It remains unanswered whether traditional approaches, including empirical research reports, can still exert influence on the decision-making process in the US. Narrow channels and the lack of channels will inevitably lower the efficiency of communication. Even if the administrations work diligently, their efforts may not deliver any immediate results. Nonetheless, there is little that China can do to change the situation. Instead, it largely depends on the governing style of the Trump administration and the evolution of the political climate in Washington. Hence, there is little that China can work on, apart from observing the situation calmly and working on relevant issues in a prompt manner.
Some media observed that the Mar-a-Lago meeting between Chinese and US heads of state marked a dual-core era of China-US coordination. Previously, some scholars forecasted the construction of “a regional order under dual leaderships.” This statement is an exaggeration, and it is too soon to come true;the Trump administration still hasn’t determined its policy towards China. Consequently, uncertainties in China-US relations are not completely eliminated, despite the sharp decline. The period from now on until Trump pays a visit to China will be critical, because both sides must eliminate potential troubles and gather together outcomes. During this period, if the two sides can work together to coordinate each other’s major concerns properly, Trump’s trip to China will herald a new era of smooth development in China-US relations, which may eventually make the dual-core era a possibility. If things move in the opposite direction, it is possible that what happened after Obama’s first trip to China in November 2009 will happen again: at that time, the Obama team lowered expectations of policies towards China and took a series of retaliatory measures (for instance, China-US relations fell from a high point due to the issue of US arms sales to Taiwan) after returning to the US when their expectations on economy and trade remained unmet. This foreshadowed the Asian-Pacific rebalancing strategy.
III. Prediction, Outlook, and Suggestion
When Trump took office in January 2017, his approval rate soared to as high as 59%, but it crashed soon afterwards. According to a report released by the polling institution Rasmussen on April 21st, the approval and disapproval rates of Trump’s performance stood at 49% and 51% respectively. Among all the respondents, 40% of them strongly disapproved of Trump’s governing policies, while 31% of them strongly approved of his approach. On April 22nd, a Gallup poll showed that Trump’s domestic approval rate was 40%, with a disapproval rate of 54%. However, according to Gallup’s polling on March 18th, Trump’s approval rate fell to the bottom during his presidency with an approval rate of 37% and a disapproval rate of 58%, which occurred when Trump endorsed Republicans’ American Healthcare Act repeal and imposed new immigration bans, which jointly dragged down his approval rate. According to the polling results of the Wall Street Journal/NBC News released on April 24th, 54% of respondents are dissatisfied with Trump’s performance as president and only 40% find him doing a satisfactory job. In the late days of the 100-day action, US stock market and treasury yield became volatile, aggravating market concerns for the future.
Although a president’s approval rate may see some swings from time to time, it is an established fact that Trump has become the least popular president following inauguration in US political history.
Generally speaking, during the first 100 days of action, Trump has suffered from considerable setbacks with few achievements. It is a troubled stage characterized by few highlights and plenty of twists and turns. He reneged on many of his campaign promises and rarely found success meeting other ones.
This unsatisfactory situation is caused by several factors: firstly, it is traditional US political rules at play; secondly, Trump’s aggressive remarks have triggered the mechanism of self-rectification and self-correction of US democracy and judicial system; thirdly, it is affected by the battle between liberalists and the pro-establishment camp within the two parties. Moreover, it is also because the Trump administration makes compromises in the face of difficulties and draws closer to US political traditions. All these phenomena reveal some problems in the Trump administration. For instance, Trump’s policy options are chaotic. He adopts an overly utilitarian and realistic approach on some issues, while being completely unrealistic on others. In addition, Trump’s team has run into troubles as well. The new administration is understaffed, and the decision-making mechanism is highly centralized with professional advice rejected by the core circle. Furthermore, his team fails to reach consensus on strategic orientation, causing trouble in team management.
Normally, when a new US president takes office, it will take him half a year to one year to learn about and adapt to the presidency. Trump underwent upheavals during his first three months in office. Chances are that he and his team will go through an extended learning period, and they are largely learning amidst the conflict between his team members and debates over various routes.
After the first 100 days of action, Trump has failed to come up with bold and resolute measures to set the tone of his first term, and more ups and downs should be expected in the future and even throughout the whole term. Conservatively speaking, whether Trump will be able to realize his doctrine of “making America great again” and re-shaping the US both at home and abroad depends on whether he can gain the opportunity for a second term.
Following the period before Trump’s inauguration and his first 100 days of action, the phase between now and the 2018 midterm election will be another chance to observe Trump’s leadership and future policies. Trump’s policy priorities and the situation confronting him both at home and abroad during this period are as follows:
a. In carrying out various policies, Trump will concentrate more on their political influence in the US and put domestic issues ahead of others, in order to guarantee wins for the Republican Party in the 2018 elections, maintain his full control over the government, Congress, and states, and reduce resistance against his administration in the latter half of his first term. In the 2018 midterm election, the US Senate will elect thirty-three seats, among which twenty-three are Democrats, eight are Republicans and two are held by Independents. This means that the Democratic Party faces an ominous election situation, in which it can scarcely play down its disadvantages against the Republican Party. Therefore, the Democratic Party pins its hope on elections in the House of Representatives and fight for its future then.
However, Trump’s performance will be the most critical factor. If he commits serious mistakes in the next year and his policies become unpopular, the Republican Party may lose control over the House of Representatives. In this sense, Trump will be more conflicted in his presidency: on the one hand, he hopes to achieve more; on the other hand, he is afraid of making mistakes. His hesitation and wavering will in turn increase the possibility of mistakes.
b. Due to the aborted repeal of Obamacare, the top priority among all domestic affairs for the Trump administration will be to promote tax reform, financial regulation reform, and “fair trade” policies, which indicates further concentration on the economic sector. To a large extent, Trump hopes to highlight his performance for voters by implementing economic, financial, and energy policies as soon as possible. In this way, with stimulated growth, expanded export, and the notable increase of new jobs in the short run, he can ensure support from the US people and pave the way for a second term. Nonetheless, Trump must address the problem of the debt ceiling approaching the legal “roof” again; if no measures are taken, US debt will cross over the legal ceiling, which stands at two trillion US dollars. When the Trump administration cannot make large borrowing, all the promised stimulus policies, including tax cut and infrastructure construction, will melt into thin air.
c. Trump will reduce unilateral actions and attach more importance to communication with Congress. Trump will promote the pro-establishment camp to undertake more responsibilities through his “America First” rhetoric and Political Action Committee (PAC), to support communication with Congress and the public. At the same time, he will work on constituencies of the Liberal Caucus members to reduce the clout of the extreme right-wing in Congress, and reduce resistance against him from his own party. However, as the domestic political struggle becomes unprecedentedly fierce in the forms of bipartisan struggle, escalating contradictions within the Republican Party or aggravation of White House infighting, etc., “time bombs,” like the scandal over contacts between the Russian ambassador and members of the Trump administration, are likely to explode at any time. This may put Trump under extreme duress, and even undermine his presidency.
d. The contradictions between the hawks in the White House, the young moderates like Jared Kushner, and the pro-establishment camp in the Republican Party are extremely complicated. At present, the latter two parties are working together to neutralize the former, but future development still requires close observation. Historically, even though right-wing extremists and neoconservatives could be among the highest leadership, they would soon fall from power because their policies cannot adapt to the reality of the US and the world. What happens to Stephen Bannon will be one of the most important indicators for the development of personnel network and domestic and foreign policies of the Trump administration.
e. Trump will become more anxious to make achievements in diplomacy, but he will only focus on foreign issues closely related to domestic politics. During the third window period which may last one year or so, Trump must decide on a few issues strongly correlated with both domestic and foreign conditions: firstly, whether to impose a border tax on imports; secondly, whether to leave the Paris Agreement; thirdly, whether to take the initiative to pursue engagement and dialogues with North Korea, or to implement new tough measures to handle changes on the Korean Peninsula. The entire world is holding its breath, and all kinds of “confidence indexes” in the US are waiting as well. For the moment, Trump is more likely to make rational decisions on these three issues than act radically. But apart from the attitude of the international community and the evolving nature of these issues, the variability of the US domestic political struggle will also influence his decisions. For instance, if Trump suffers a major crisis in his presidency in the next one hundred days, or the core personnel network in the White House witnesses notable changes, which may destabilize Trump’s presidency, there is a chance that he will make surprising moves on issues concerning public benefits in the international community.
f. Trump’s diplomacy is results-oriented and he is in no rush to settle everything as is evidenced by the phrase “results-oriented” put forward by Secretary of State Rex Tillerson and his assistant to describe Trump’s policy towards China. In this sense, Trump’s foreign policies appear to be highly liquid, with considerable room for changes. Due to impact of external factors, it remains uncertain whether he can continue to adapt to using more traditional approaches. Three issues are most likely to lead to drastic changes: firstly, the situation in the Middle East, particularly new developments in the Syrian war and the desperate struggle of ISIS; secondly, the possibility of new large-scale terrorist attacks in the US and Europe; thirdly, the results of three critical European elections in France, the UK, and Germany in the second half of 2017 and their combined effects. Therefore, the period between now and the end of this year will be the critical phase for the finalization of Trump’s diplomatic policies. Under the combined influence of internal and external factors, the Trump administration will present a clearer picture to the world.
g. The global strategy of the Trump administration—if there is one—appears poised for contraction. As Trump’s will to lead the world is waning, the Trump administration will attempt to reduce the burdens of foreign affairs on the US, and hold down the costs of the US hegemony. This has incurred two questions—how to carry out soft and hard measures, and where is the US’s global strategic focus. Trump still explores these two questions with no conclusion yet. At present, Trump undertakes a few issues at the same time and acts on trading and interest thinking. He tries to secure cooperation from others on one issue by making compromises on another. He may also use punishment to meet his goals; he may tighten his claws on one issue to punish others for not being cooperative or not being cooperative enough on another. If coordination does not work, he will make unilateral moves, which is against the rule of diplomacy and the conventions of international relations. These practices are dangerous, because if they are mishandled, risks may not be able to be contained and hot-spot issues may spiral out of control.
The shift of strategic focus to the East is less of a topic of discussion during Trump’s presidency. The Asia-Pacific region, however, is still a focus for the expansion of naval power. What’s more, Trump takes the North Korean nuclear issue as a key issue in promoting US Asia-Pacific strategy. Under the pretext of the North Korean nuclear threat, he strengthens US-South Korea-Japan coordination and US strategic deployment in Northeast Asia. Hence, the fundamental obstacles to China-US strategic trust have not diminished greatly, and the risk of maritime clashes remains high. As Trump’s diplomacy is still adjusting after several frustrations, the outside world should not ignore the risks and allow the power struggle over Asian-Pacific security and global trade to turn into “a matter of trial and error,” which will be a high price to pay for both sides. Rather, they must take action to guide Trump’s thinking as a president, so as to jointly influence him.
Suggestions for China in Handling Relations with the US in the Next Stage:
a. China should build new China-US relations which are result-oriented and guaranteed by principles. China and the US have gained enormous experience in dealing with each other over the years, evolving from paying obligated attention to standards, forms, and mutual exchange to valuing substantial progress and efforts. This feature will become more noticeable during Trump’s presidency. However, China-US relations should not focus merely on interests and results, while neglecting principles. The essential principle that will ensure the smooth progression in China-US relations is mutual respect for each other’s core interests.
b. China should give full rein to the role of four dialogue mechanisms, which are diplomatic security, comprehensive economic dialogue, law enforcement and cyber security and social and cultural exchanges, while enriching military dialogue and communications in conformity with the general trend of China’s military reform. In this way, mechanisms will adapt to the new situation (including the basic characteristics of Trump’s domestic and foreign policies) in China-US relations for the new era. It is advisable to make targeted efforts and work on bolstering mutual trust, clarifying doubts, and carrying out strategic communication under full authorization. Relevant dialogues can be held at any time as are needed, instead of being constrained by forms and intervals.
c. China should properly handle the “outsourced pressure” coming from the Trump administration with respect to the North Korean nuclear issue. Whatever motive or strategy Trump harbors over the issue, China should uphold the basic principle that China will deal with the issue in accordance with its fundamental national interests. The North Korean nuclear issue is of great importance and its challenge is escalating. Yet, it is not the only issue on the Korean Peninsula or in Northeast Asia. China must take both domestic and foreign situations into consideration with a global perspective and a package of plans, and demonstrate the noblest intention of reducing the possibility of wars while promoting negotiation. It is advisable to carry out these goals by urging North Korea to abandon its nuclear programs, which is the largest common interest of China and the US. Yet, if pressing North Korea does not work well, China should work on economic affairs and use bilateral and multilateral means to direct North Korea’s attention to social programs and regional cooperation, so as to change its preference of sacrificing development for security.
d. China should be prepared for the implementation of Trump’s trade policies. Trump does not want US dollars to inflate, but, for the sake of his fiscal and monetary policies, he needs US dollars to remain moderately strong. Under the influence of various factors, US dollars will remain relatively strong in general in the next few years. Interest rate hikes in the US match the trend and will definitely exert impact on the liquidity of US dollars on the foreign offshore market. China’s economy is developing steadily and it has made preparations via a series of de-leveraging measures since 2015. However, China’s housing market is still severely distorted and the debt ratio of enterprises on the capital market remains high. Under such circumstances, China still faces difficulty in the readjustment of its economic structure, so it is more urgent to strengthen macro-coordination with the US.
e. It is advisable to clearly define China’s role in global governance. China should live up to expectations by assuming a positive posture, taking initiatives on global issues to promote and strengthen international coordination regarding trade and climate changes, and checking the tendency to make wrong decisions. In order to achieve this goal, enterprises should play an active role.
f. China should take the Taiwan issue and South China Sea disputes seriously, and should be aware that the US might transfer its dissatisfaction to other issues and take retaliatory measures if it ever feels dissatisfied with China-US coordination on these issues. The most destructive measure will be new large arms sales to Taiwan by the US.
g. Trump’s foreign trade policy intends to resume and advance the China-US Bilateral Investment Treaty (BIT) negotiation, continuing the bilateral trend. Multilateral systems and bilateral agreements are “two wheels” of China’s participation in the international trade system. During the BIT negotiation, China has adjusted its policies for foreign investment management, opening up both pre-establishment national treatment and a negative list to foreign investment. As the progress in reform did not come about easily, both China and the US should take full advantage of the change, aspire to loosen more deadlocks in multilateral processes via bilateral means, and jointly push for trade facilitation measures that are of a higher level and with more mutual benefits. (The end)
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