A partial trade deal reached between the U.S. and China last Friday sent markets soaring. While the tentative deal is set to be signed in the coming weeks, Chinese negotiators have said a final accord will require the removal of all new tariffs.
In a newly released interview taped last Tuesday, before the partial deal, a former top national security official under Barack Obama said Chinese leaders will not be intimidated by President Donald Trump.
“They're not scared of Donald Trump, not under this Chinese leadership, at this point in their history and development,” says Susan Rice, who served as National Security Advisor over Obama’s second term. “It's not what they want, but if that's what we bring, they're going to play to win. And we need to understand that.”
Rice, who recently released a memoir called “Tough Love,” acknowledged that the U.S. holds justifiable grievances toward China on trade, including both trade terms and Chinese efforts to circumvent them.
“We need to stand up to that,” she told Yahoo Finance Editor-in-Chief Andy Serwer. “But we need to stand up in a way that's smart, and strategic, and that has an end game. And I don't envision an end game, other than potentially capitulation after a costly and lengthy trade war.”
“They're not going to back down,” says Rice, who also served as the U.S. Ambassador to the United Nations under Obama. “Too often, we see the president backing down, after escalating and raising expectations.”
If signed, the partial trade deal will require the Chinese to buy between $40 billion and $50 billion in agricultural goods each year, nearly double what the country purchased before the trade war began and far more than the $13.8 billion in such products bought in 2018. The Chinese will also address some issues concerning intellectual property theft and financial services, the Trump administration said.
In exchange, Trump will eliminate additional tariffs that were set to take effect on Oct. 15, when duties on $250 billion of Chinese products were expected to rise from 25% to 30%. The deal may cancel another round of tariffs, slated for December, that would place a 15% tax on about $150 billion in Chinese goods.
Rice served as the National Security Advisor under president Barack Obama for three and a half years, giving intelligence briefings to the president each morning; and before that, she spent Obama’s first term as the U.S. Ambassador to the United Nations. Earlier in her career, Rice served as U.S. Assistant Secretary of State for African Affairs in Bill Clinton’s administration, and spent several years as a fellow at the Brookings Institution.
She currently sits on the boards of Netflix and the John F. Kennedy Center for the Performing Arts.
She made the comments during a conversation that aired in an episode of Yahoo Finance’s “Influencers with Andy Serwer,” a weekly interview series with leaders in business, politics, and entertainment.
‘We’re going to have to compete, and it could get ugly’
In addition to the specific issues at stake in the trade war, Rice pointed to a “larger challenge” that the U.S. faces in its posture toward China.
“They are rising, and they're going to become a more and more formidable competitor — economically, militarily, and otherwise,” Rice says. “But that does not render conflict inevitable.”
“We're going to have to compete, and it could get ugly,” she adds. “But there are also avenues through which we can and must cooperate.”
Max Zahn is a reporter for Yahoo Finance. Find him on twitter @MaxZahn_.