Time for Trump to Change His Trade Tactics
Too big a price for the tech industry?
Eleven long months ago, at Fortune's Brainstorm Tech conference in Aspen, Colo., New York Times columnist Thomas Friedman cogently explained how a rational, effective president of the United States would handle a trade dispute with China. He'd sign the Trans-Pacific Partnership trade deal, bring European allies into the agreement, and then negotiate quietly with the Chinese in a way that would save them embarrassment.
The current president did none of these things, and the tech industry is an important segment of the global business community that may well pay a price for the president's petulance.
Friedman himself reprised his themes last week. Over the weekend his news-side colleagues reported that the Chinese government had summoned representatives for several Western technology companies, warning them not to honor U.S. restrictions from working with Huawei, the Chinese communications equipment company. Also over the weekend, it emerged that the White House's acting budget director asked the administration to delay implementation of the Huawei ban after rural telephone companies and other businesses complained of the harm it would cause.
Depending on your level of charity toward the administration, the request is a sign either of a poorly considered policy in the first place or an example of government responsiveness to the concerns of its citizens.
Two truisms are at play here. First, the Chinese need to be held to account for their trade practices. Few reasonable businesspeople dispute that. Second, the global technology industry is deeply interwoven with China. (The Economist explains this well here.) If the world's greatest dealmaker wants to make progress on the former without badly screwing up the latter, a change in tactics might be in order.
A version of this essay appeared in this morning’s edition of Fortune’s Data Sheet.