1. Opinion

Trump backs off China tariff threat as China pumps money into a Trump family project

Published May 17, 2018

In barely six weeks, President Donald Trump has gone from threatening to impose $150 billion in tariffs on Chinese goods to extending a lifeline to ZTE, a Chinese cell phone company that violated U.S. sanctions by doing business with Iran and North Korea. The U.S. military regards ZTE's products as a security threat.

The possible reasons for Trump's about-face are many. They include international trade and security considerations; China's government owns a third of ZTE. That same Chinese government just guaranteed a $500 million loan that will greatly benefit a project in Indonesia in which Trump's real estate company has a huge interest. To say this overlap of Trump's business interests with his official duties is "troubling" doesn't quite do it justice.

The Commerce Department last month banned U.S. firms from doing business with ZTE for seven years. The firm makes inexpensive cell phones that contain a lot of U.S. materials and components. ZTE fell under sanctions for breaking a promise to stop doing business with Iran and North Korea. Trump tweeted last week that he was worried about the possible loss of "too many jobs" in China and ordered the Commerce Department to back off.

He could be currying favor with Chinese President Xi Jinping ahead of next month's summit meeting with North Korean President Kim Jong Un. He could be trying to prevent Chinese tariff retaliation against U.S. agricultural products, which worries Republican members of Congress from farm states like Missouri and Illinois. It could be that Trump finally woke up to the fact that a trade war with China would be disastrous.

But the timing points elsewhere. Trump continues to personally profit from business deals done by the Trump Organization, now being run by his sons Donald Jr. and Eric Trump. The president claims to have no involvement in the firm's day-to-day operations.

Even before Trump was elected, his firm had a deal with the Indonesian development company MNC to build hotels and a golf course at a huge theme park in Lido City, outside the Indonesian capital of Jakarta. Marketing materials for "MNC Lido" describe the Trump properties as "flagship" elements of the theme park and show Trump's sons were directly involved.

But MNC had trouble finalizing financing until last Thursday, when the Chinese government extended a loan to the state-owned Metallurgical Corp. of China, which has partnered with MNC.

Seventy-two hours later, Trump was ordering sanctions lifted from ZTE ahead of a visit from Chinese Vice Premier Liu He later this week.

The good part of all of this is that Trump has dropped his bluster about a trade war with China, which was always a bad idea. The bad part is that China seems to have figured out that the way to this president's heart is through another unconstitutional emolument.


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