Saturday, January 16, 2021

‘Taking a hard line gets results’

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CNBC’s Jim Cramer on Wednesday made a plea for Joe Biden to stay tough on China once the Democrat moves into the White House in the new year.

“I hope the incoming Biden administration can look at Trump’s trade war objectively, because in many ways, really, it worked,” the “Mad Money” host said. “We made real progress on getting China to finally play by the rules and it would be a shame to throw it all away.”

Cramer made the comments in reaction to a New York Times opinion piece that came out earlier Wednesday, in which President-elect Biden gave some insight into his U.S.-China strategy.

Biden told columnist Thomas Friedman that the best China strategy is to get America’s allies “on the same page,” and that he would prioritize rekindling relations with U.S. allies early on.

Cramer, however, said he was uncertain about Biden’s ability to do that after President Donald Trump drew the U.S. into a trade war with China beginning in summer 2018. It will be a big challenge for the Democrat after he is inaugurated on Jan. 20.

“That sounds good in theory, but I don’t know how you get our allies on the same page at this point,” Cramer said.

The trade war was helping the U.S. gain leverage on China, leading to a partial trade deal that was inked at the beginning of 2020, until the coronavirus pandemic stunted that progress, Cramer said.

“The lesson of Trump’s trade policy is that taking a hard line gets results. All those tariffs made it easier to negotiate real concessions,” he said. “I think we would’ve done even better if the president had been less openly disrespectful and our policy had been more consistent.”

Trump’s 25% tariffs remain in place on about half of the imports from China, whose economy is only second in size to the U.S. Biden has committed, at least for the time being, to leaving those taxes on Chinese imports in place as well as the Phase 1 trade deal that the Trump administration negotiated with China, a deal Cramer supports.

Cramer questioned America’s ability to pull allies into a campaign to crack down on unfavorable trade practices by the Chinese government. American leaders have accused China of stealing intellectual property, dumping low-quality products in the country, providing unwarranted subsidies to corporations and forcing what’s known as tech transfers in order for American companies to do business there.

Reigning in China is a tall task that only the U.S. can afford, given that China is the European Union’s largest trade partner, Cramer said.

U.S. allies are “making a lot of money trading with the Chinese and it doesn’t hurt that the Communist Party’s throwing money all over the globe with its One Belt One Road initiative,” he continued. “They’re giving out better bribes than our government’s willing to pay. I’d love to be proven wrong about this, but I’m not holding my breath.”

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