for almost three years now,

and oftentimes it looks very chaotic.

The China trade deal is dependent on one thing,

do I wanna pick it.

If we don't make a deal with China

I'll just raise the tariffs even higher.

Thank you very much.

And it's really hard to think back to the beginning of it,

but how it really started actually

seemed like there was a strategy to it.

Over the course of the U.S.-China Trade War,

Trump's aggressive policies and unpredictable behavior

has managed to bring the Chinese to the negotiating table.

We've come to a very substantial phase one deal.

China will continue to eat your lunch

unless somebody takes a stand,

and it just so happens that it was Donald Trump

that took the stand.

We're close.

With the promise of that phase one deal

looming on the horizon, can that same aggressive strategy

produce meaningful reform in China?

I wrote a paper during the Obama Administration

saying people are not taking China seriously enough,

and the President has to be directly involved

for American policy to actually make sense.

I think in some ways it's better to wait

'til after the election with China.

But, I'm not gonna say that.

I just think that.

Now the President is directly involved

and American policy doesn't make sense.

The reality is that the Trump Administration

has done this in a much more aggressive way

than previous administrations have.

It was an asset going into this trade war.

It may have been a liability in the end.

This is a case study

of when negotiating tactics turn from method to madness.

We can't continue to allow China to rape our country,

and that's what they're doing.

It's the greatest theft in the history of the world.

President Trump ran a successful campaign

of denouncing China's unfair trading practices.

They take our money, they take our jobs,

and we owe them $1.6 trillion.

I think it's important to understand

that the President inherited a very difficult situation,

one where we probably should have addressed

some of these problems with China a lot sooner.

But I think the President had great wisdom and courage

to step up and realize that we really can

start to make progress.

And after becoming President

his team began devising a strategy

on how they could rebalance the relationship with China.

And this man, Derek Scissors,

was part of those initial conversations.

The goal starts with we're gonna

focus on intellectual property,

which we were trying to decide how do we get the Chinese

to reduce their intellectual property coercion and theft.

They weren't gonna stop, but how can we reduce it?

How can we show we're serious about this issue,

change their behavior?

And that got pulled into the President saying,

"I want high tariffs.

"I wanna reduce the trade deficit."

Which is a completely different goal.

Putting tariffs on all firms doesn't discourage theft

and coercion of intellectual property,

'cause it doesn't punish the guilty.

It punishes everyone.

Tariffs are really the big bazooka in the trade world.

You don't like to use them normally,

or if you do use them in the trade world,

you tend to use them for short-term leverage

to try and get someone to the negotiating table.

In March 2018 Ambassador Lighthizer,

the trade representative, was testifying on Capitol Hill,

and he was kind of laying out what he called an algorithm.

The purpose of your algorithm is to pick out things

to the extent you can that are in that category.

Things that are in the category have the maximum effect

on China and the minimum effect on U.S. consumers.

The initial number that folks

at the U.S. Trade Representative's office came up with

was $34 billion.

And the President looks at it and says,

"Well, that's not big enough."

And we've seen this a lot in our reporting,

covering this trade war,

that the President really likes round numbers.

A second list of $16 billion

of Chinese goods is published,

raising the total initial tariffs to $50 billion.

And while looking back, this may seem haphazard,

it is part of President Trump's strategy.

And this is just the beginning.

I wanna tell you that.

This is just the beginning.

Donald Trump has always had two things he's

tried to accomplish through these trade wars.

One is selling it domestically to his base.

He wants to be seen to be punching China in the nose.

And the second thing is his old art of the deal approach,

and that is he likes to destabilize people

across a negotiating table.

This administration has kind of prided itself

on being unpredictable.

Kinda the notion that unpredictability

is a real strength in a negotiation

because if they don't know what they're gonna do,

somehow they're gonna give you more.

But not everyone agrees with that sentiment,

at least in regards to the larger intent

of getting a deal done with China.

To me they haven't been unpredictable at all.

I think the President has been saying

for two and a half years that he wants

to have a deal with China if he can get a deal

that is good and that is in U.S. interests.

And he's gotten a deal with Korea,

and he's gotten a deal with Mexico,

and he's gotten a deal with Canada,

and he's gotten a deal with Japan.

And we're having these negotiations with China.

Early on the maximum pressure strategy

only resulted in the Chinese

responding with tariffs of their own,

going after areas that could hurt Trump's political base,

imposing tariffs on the auto industry,

pork, and especially soy beans.

Once the Chinese stopped buying soy beans

the impact on the markets was pretty stark.

Immediately the price collapsed

and farmers started getting hit.

So when you engage in this tit-for-tat tariff war

the question is really who can

live with the pain for longer.

And obviously that is a question of political will,

and that's always gonna be the case.

And there's sort of no way around that.

Fortunately for us, President Trump

has shown that he has that political will.

For the rest of 2018 the two countries

would raise tariffs back and forth.

The U.S. would go from its initial 50 billion in tariffs

to 250 billion.

And China's total tariffs would now hit

110 billion of U.S. goods.

Eventually these tariffs would have their desired effect.

In December of 2018 President Trump

and Chinese President Xi Jinping

would meet face to face in Buenos Aires.

Start on meeting we'll be

talking about a number of topics.

At that dinner in Buenos Aires,

the two leaders agree that they won't raise tariffs

on each other anymore or at least for 90 days

while they try to negotiate a new deal.

Over the spring the two sides keep negotiating,

but the Trump Administration

seems to be moving the goalposts,

or at least that's how the Chinese see it.

One, they refused to lift tariffs as part of any deal

and secondly Trump seems to be constantly increasing

the amount of purchases he wants to see from China.

At one point he goes from $1.2 trillion over six years

to a $2 trillion number and that just seems both impetuous

to the Chinese but also economically impossible.

By April the two sides

create a 150-page document,

and there's optimism that a deal is in sight.