China can earn its way out of Trump’s tariffs: Michael Pillsbury

Channel: Fox Business
Published: 05/07/2019

Hudson Institute’s Michael Pillsbury discusses the U.S.-China trade negotiations and President Trump’s threat to slap more tariffs on China. FOX Business Network (FBN) is a financial news channel delivering real-time information across all platforms that impact both Main Street and Wall Street....

Want to get right to michael pillsbury for what is going on with china. He is one of the world's leading experts on china. Is this tough line the president is taking? Is that the way to go sir? Yes, it is. The president is reacting to two different things: lizz one is the reneging and he used the word in his tweet renegotiate by china. This is really a bad faith in negotiation to give up something ...
agree to it and then come back and try to revisit the whole thing. So that's one thing he made very clear in his tweet on sunday, but there's a second part of it, which i addressed. This morning, in a longarticle about why the tariffs are a good thing for a temporary period, there's a fear that china is going to cheat on the trade agreement that they have no real incentives, not to cheat to go straight. If you will so tariffs, give the opportunity to china to earn their way out of the tariffs by complying with commitments they've made. This is a very unusual new idea at president trump is using it's not the old kind of tariffs that alexander hamilton proposed that you know to protect. American industry have terrorists for a hundred years. It'S not a tariff. That'S designed to protect steel or aluminum.

There'S a very different kind of tariff: that's basically punitive innature, but china can earn its way out of the tariffs fairly quickly. So this is not a long-term reduction in the growth rate. It'S a way to get china's attention and i was very pleased that lyoha is coming. The talks will be held thursday and friday. The market, you know the idea of buying on a dip could pay off handsomely. If the talks make a lot of progress on thursday and friday, even with the tariffs on and then the market compensates and jumps up, 500 points or more sir, has china been, i think you pointed out it. Has china been busy in these last three weeks trying to weaken the deal? Those who say thati think are referring correctly to chinese activities that have started back in early march, actually more than two months ago, to kind of not have the can sessions, they made. Be final and not have them very well-known. These talks are secret. As you know, liz 150 page text, not one word - has leaked on the chinese side - is possible that the hawks didn't really understand the degree of concessions that had been made, and so they got a hold of the whole hundred and fifty pages. Instead of a summary - and they began to realize that these are really serious concessions, president trump has has got out of china so that maybe they got a chance to takethem back recently now, they've seen that the punishment president trump is giving them means, don't do this Again, if you make a concession you stick by it, the american side has made some concessions too. So one can be still quite optimistic about these talks, but both sides are very practiced.

Tough negotiators, i think president trump's better, but the chinese are no slackers. When it comes to tough negotiating there's, the question will erie will trying to really give up the hacking and espionage. I think you pointed out that economic crime really does pay well they're only going to give it up if they're, strong incentives like tariffs to be you know, taken off on it. Thechinese built a model. I'Ve written a book about that. It'S very quite unique in the world, there's still a state-controlled economy. Many people think they've grown so much in 40 years. They must have had a free market, that's simply not correct, so they need these practices, the theft, the espionage, the subsidies they need this badly for their model. But some reformers in china want to change that at least to some degree and that's what president trump is working on. Ambassador light hyzer made this clear in his testimony. Should we name china, a currency, manipulator lavaca china to get the deal done? Well, the treasury department owed an answer to that question. April 15th and theystill haven't made it it's controversial in our system, because if you name a country, a manipulator of currency, certain sanctions can be placed on them.

Chinese have gotten better they're, not as bad a manipulator as they were. You know five years ago, so some people don't want to go all the way and call them the manipulator, but it's an issue where they can earn their way out of that we label them. On manipular, then they stop. Then we take it away this. I think this is the dynamic president. Trump is trying to pursue to get a new china. He wrote a book a few years ago, where i used a wonderful phrase. Liz itwas called good china and bad china said we don't want bad chine that we want good china all right, michael pillsbury. Thank you. So much we'd love to have you on come back soon.

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