Trump’s Trade Chief Lays Out Plan to Beat China at Its Own Game

Robert Lighthizer's new book calls for strategic decoupling from China

Ambassador Robert Lighthizer, U.S. Trade Representative, testifies at the House Ways and Means Committee hearing on U.S.-China Trade in Washington on Feb. 27, 2019. Jennifer Zeng/The Epoch Times

Former U.S. trade representative Ambassador Robert Lighthizer views the decades of U.S. trade deficit with China as a “wealth transfer.” In his recent interview with EpochTV’s “American Thought Leaders” program, he outlined a playbook to beat China at its own game through strategic decoupling, very much the same thing China has been doing to the United States, he said.

In his new book “No Trade Is Free: Changing Course, Taking on China, and Helping America’s Workers,” he recalled a meeting he attended in Beijing in November 2017, during which he told Xi Jinping, general secretary of the Chinese Communist Party (CCP), that the U.S.-China trade relationship was unbalanced.

And from there, Mr. Lighthizer said he changed the tone of the trade talks that used to be rounds of vague commitments with no follow-ups on actions, which reset with each new U.S. administration.

“I was never interested in one of these things where the status quo favors the other side by definition,” he told The Epoch Times. “And as long as they can kick the can down the road, they’ll maintain that benefit, that preference, in many cases, that transfer of wealth.”

Robert Lighthizer, former U.S. Trade Representative and author of "No Trade Is Free: Changing Course, Taking on China, and Helping America's Workers," in Washington on July 10, 2023. Madalina Vasiliu/The Epoch Times

‘Net Transfer of Wealth’

To Mr. Lighthizer, it’s not a problem when a country runs a trade deficit with another over short-term periods. However, decades of deficit in the amount of hundreds of billions of dollars—as is the case of U.S. trade with China—is essentially a “net transfer of wealth,” he said.

The U.S. trade deficit with China has nearly quadrupled since December 2001, when China joined the World Trade Organization. Source: U.S. Bureau of Economic Analysis

The U.S. trade deficit with China has nearly quadrupled since December 2001, when China joined the World Trade Organization, according to the Bureau of Economic Analysis. The total trade deficit from 2002 to 2022 totals over $5 trillion—one-fifth of the U.S. GDP in 2022.

During the same period, the U.S. net investment position—how much Americans own all over the world versus how much the rest of the world owns in the United States—grew nearly six times to a negative $16 trillion in 2022.

The trend of U.S. net investment position—how much Americans own all over the world versus how much the rest of the world owns in the United States—mirrors the trend of U.S. deficit with China between 1999 and 2022. Source: U.S. Bureau of Economic Analysis

“We are getting these T-shirts and our third and fourth televisions cheaper, but we’re paying for it by transferring assets of our country overseas,” he said in the interview.

He called it a “fool’s bargain”: “That’s a bad deal; that’s not a good deal. In many cases, it’s current consumption for a long-term loss of value.”

His essay “The Free Trade Folly” summarized the same problem earlier this year: “We are literally trading the future control of our country, the wealth of our children and grandchildren, for current consumption—cheaper TV sets and sneakers. This is madness.”

U.S. Trade Representative Robert Lighthizer participates at a discussion at the 9th China Business Conference at the U.S. Chamber of Commerce in Washington on May 1, 2018. Samira Bouaou/The Epoch Times

The Myth of Free Trade

Mr. Lighthizer thinks of free trade as a “false religion.”

“Nobody practices free trade. For sure, if you look at the great countries that run big surpluses, they don’t have free trade. In China, it’s not remotely close. It’s not even capitalism. Germany doesn’t have free trade. Europe doesn’t have free trade. It’s all just a false God, and it literally doesn’t exist,” he added.

According to him, China has plans for achieving global dominance and has capitalized on foreigners hungry to make money in the country.

“It’s China deciding, ‘I’m going to make you rich because it’s going to help me.’ Those people then become advocates for China. That’s more or less the trade-off,” he said.

“The notion of using Americans to help a foreign power and having individuals make money is certainly not a new thing,” said Mr. Lighthizer. “It’s certainly not something that the Chinese have invented.”

Strategic Decoupling Playbook

The United States needs to strategically decouple with China, “very much like the Chinese have towards us,” Mr. Lighthizer said.

He said that “de-risking,” a strategy adopted by G7 countries to diversify their supply chains away from China, was “a tiny step in the right direction,” calling the move “strategic decoupling-lite.”

“I think it’s a way of trying to do what is right, but still make all the very rich American companies who import from China happy. They are trying to kind of have it both ways,” the former trade official said.

Mr. Lighthizer’s strategic decoupling playbook includes the following elements: achieving balanced trade, cutting off the flow of U.S. technology to China, and managing inbound and outbound investments.

To balance U.S.-China trade, Mr. Lighthizer said President Donald Trump’s tariffs worked. Since the first tariffs were slapped in July 2018, the U.S. trade deficit with China decreased until 2020. His explanation for the trade deficit bounceback in 2021 was that the combination of demand stimulated by the U.S. government’s pandemic relief packages and the shutdown of domestic manufacturing drove purchases from overseas.

Another tool that would potentially work to reduce the trade deficit, according to Mr. Lighthizer, is Warren Buffett’s idea of import-export certificates. In a 2003 article, Mr. Buffett illustrated a proposal that companies would get import certificates on a dollar-to-dollar value based on their export amounts. Therefore a company that does more imports than exports would have to purchase import certificates on the market. That was his idea of letting the market figure out how to balance trade.

While all countries do what’s in their best interest in international trade, China’s trade has a “sinister overlay” of technology theft, said Mr. Lighthizer. Combatting this, according to him, requires stopping the regime’s forced technology transfer and managing the investment from and going to China, and would put an end to America’s facilitation of the CCP’s ambition of global dominance with technology or funds.