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Democrat-led House may back Trump in trade war

But it will offer tougher scrutiny of his negotiations with allies, add trade experts and lawmakers

House Democratic leader Nancy Pelosi has applauded Mr Trump's initial round of tariffs on China as a "leverage point" to negotiate fairer trade for US products in the country.


THE new Democrat majority in the US House of Representatives is likely to back President Donald Trump's trade war with China and could even egg him on, but will offer tougher scrutiny of his negotiations with allies, trade experts and lawmakers say.

Mr Trump has imposed tariffs on US$250 billion of Chinese goods to pressure Beijing to stop intellectual property theft and forced technology transfers, improve market access for US firms and cut its high-tech industrial subsidy programme - major shifts away from China's state-led economic model.

Democrats, the traditional party of trade unions, largely support such moves, especially for their hoped-for effect on helping American workers.

"I think Trump has a free hand to pursue his aggressive approach. If anything, the Blue Wave (of Democrats) will be as hawkish, if not more hawkish, than Trump on China," Gary Hufbauer, a senior fellow and trade expert at the Peterson Institute for International Economics, said.

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Beijing has retaliated by largely cutting off purchases of US soyabeans and imposing its own tariffs on farm products, steps that some experts had believed could hurt farm state Republicans in Tuesday's congressional elections. China was the biggest buyer of US soyabeans before the trade war.

But the tariffs were at best a minor issue in most races, even in hard-hit states such as North Dakota, Indiana and Missouri, which voted in Republican senators, strengthening Mr Trump's hand in the chamber.

Scott Kennedy, head of China studies at the Strategic and International Studies in Washington, said there is growing bipartisan concern in Washington about increasing state control of China's economy, military activity in the South China Sea and security issues surrounding Chinese technology companies.

"President Trump has paid no political price for taking a tough line on China," he said. "I still see the short term-political and long-term strategic signals on China still pointing in the same direction."

House Democratic leader Nancy Pelosi, who made a pitch to return as speaker on Wednesday, has applauded Mr Trump's initial round of tariffs on China as a "leverage point" to negotiate fairer trade for US products in the country.

"The United States must take strong, smart and strategic action against China's brazenly unfair trade policies," Ms Pelosi said in March.

Those Democrats who may be upset that Mr Trump's tariffs on Chinese goods and steel and aluminium will raise business costs and prices also face a practical problem in that they have little legislative means to stop them, since they are the result of executive orders, which do not need Congressional approval.

Mr Trump has signalled in the past week that he believes a deal with Chinese President Xi Jinping is achievable. The two are due to meet on the sidelines of the G-20 leaders' summit at the end of November.

If things do not go well, he has threatened to impose tariffs on about US$267 billion worth of remaining Chinese imports to the United States. Currently, 10 per cent tariffs on US$200 billion of products are scheduled to rise to 25 per cent on Jan 1, 2019.

"House Democrats are the most protectionist group in Congress," said Derek Scissors, a China scholar at the American Enterprise Institute in Washington. If Mr Trump makes a deal that fails to achieve significant changes to China's practices,"they'll jump all over him," he added.

Representative Richard Neal, the expected new Democratic chairman of the tax-and-trade focused House Ways and Means Committee, sees China as a "big challenge" that both parties and multiple administrations have tried to tackle, a Democratic aide to the panel told Reuters.

China too appears to have few illusions that the election results will earn it a reprieve from the Trump administration.

"Particularly on trade, both (US) parties agree. So, it will have little impact," said Wu Baiyi, the director of the Institute of American Studies at the state-run Chinese Academy of Social Sciences.

The Global Times, a nationalist Chinese tabloid, said in an editorial late on Wednesday that the Republicans' loss of the House "will hardly have any direct bearing on Trump's China policy".

"China doesn't need to be deluded by a perceived change in US politics. We should just go about our own business," the paper said.

The bipartisan unity is less secure when it comes to trade talks with allies, however, and the new Democrat majority could make it more difficult to win congressional approval for a revamp of the North American Free Trade Agreement (Nafta) with Canada and Mexico.

Mr Neal and Representative Bill Pascrell, who is set to chair the Ways and Means trade subcommittee, are promising to haul Mr Trump's top trade lieutenants into hearings not only to explain their strategy on China but also on future trade negotiations with the European Union, Japan and Britain.

In a letter to fellow Democrats on Wednesday, Mr Pascrell said that Republicans had refused to bring administration witnesses into hearings on tariffs or Nafta negotiations.

"Without hesitation, I would hold regular meetings and public hearings with members of this administration to impose transparency and assert Congress' constitutional role in setting trade policy," Mr Pascrell added. REUTERS

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