On August 18, 2017, US President Donald Trump “dismissed” his close friend and confidant, Steven Kevin Bannon from his job as White House Chief Strategist. However, the official announcement was that Bannon had resigned. In any event, it appeared Trump sought order among his White House advisors and Bannon was a major source of dissonance.
But policy was also involved. Bannon was a powerful ideologue and espoused a strong nationalist point of view on foreign policy issues. Trump was a proponent of bargaining and negotiating (which Bannon was not).
In particular, the two were at odds over the US’ China policy.
Here are the details:
A year earlier, in August 2016, Trump made Bannon chief executive of his presidential campaign. Observers subsequently credited Bannon for Trump’s victory by helping him win over conservatives and those unhappy with the direction America was going. They also cited Bannon’s genius in formulating Trump’s campaign tactics.
On foreign policy, Bannon focused on the US trade deficit, which he argued was profoundly hurting the US economy and American workers. China was in his crosshairs. This was a winning issue in presidential campaigns and it had resonance with American voters during this one.
In November, following Trump’s election victory, Bannon became chief strategist and senior counselor to the president-elect. After Trump became President, Bannon kept his position on the White House team of advisors and also joined the National Security Council.
There soon developed serious friction between Bannon and other top White Officials. Bannon clashed with White House Chief of Staff Reince Priebus on a number of matters. When General John Kelly took over that position in early August, he had serious gripes about Bannon. There were reports in the media and elsewhere of major discord among White House staff and that Bannon was the source. President Trump had to restore order.
This was the proximate or immediate cause for Bannon’s departure. Disagreements on policies, in particular the US’ China policy, were overshadowed for the moment by the personnel aspects of the event.
But the policy tiffs were arguably salient and had implications for the Trump administration’s efforts to manage global affairs. And relations with China took center stage.
Just two days before Bannon’s departure, on August 16, he gave an interview to The American Prospect editor Robert Kuttner. Bannon said that the United States was engaged in an “economic war” with China. He further charged that America was losing the war.
Bannon went on to say that US-China relations would hit an “inflection point” in ten years — from which “we will never be able to recover.” He declared that “one of us is going to be a Hegemon in 25 or 30 years and it is gonna be them if we go down this path,” referring to America’s weak stance in allowing the trade deficit with China to persist.
Bannon further asserted that the North Korea crisis was “just a sideshow” and that China would do little to rein in Pyongyang.
Trump’s former White House Chief Strategist went on. Bannon stated that the US is about to hit China hard over its unfair trade practices. He said specifically that the Trump administration would employ Section 301 of the 1974 Trade Act against China for its practice of using coercion to get technology from US companies (by threatening to deny them access to the China market).
Finishing up, Bannon said: “We are going to run the tables on these guys.” In an angry tone, he averred that the US needed to be “maniacally focused” on the economic war with China.
At this point, it became obvious that Bannon’s ideas were very much at odds with Trump’s. The two were plainly not in sync on US-China relations.
At the heart of their differences was the fact that Trump was now president and had to make workable foreign policies. Campaigning was about rhetoric and ideology; now it was a different game.
Also, Trump was a transactional president. His approach to foreign relations was to negotiate and to do that he had to establish relationships with the leaders of important countries, understand them, and bargain (give and take) to resolve problems.
Henry Kissinger advised Trump on China’s importance and how to deal with Chinese leaders. He pitched personal diplomacy and patience. Former Treasury Secretary Hank Paulson advised that the United States could not maintain the international financial system, deal with terrorism, control nuclear proliferation, and fix the global environment without working with China. Others told Trump the same thing.
Trump put his negotiator strategy to work to repair US-China relations, which were at a low point before Barack Obama left office. He displayed his diplomatic touch during his first meeting with Chinese President Xi Jinping in April in Mar-a-Lago.
Trump calculated that China was the most important country in the world to the US and that he needed China as a partner. He was positive he could get things done.
Trump felt that Xi realized that the trade deficit was unsustainable and if not reset would lead to greater problems, and was confident he would take steps to help mend it. But Trump knew that it could not be resolved in a short time; it had taken some time to grow into a serious problem and would take months or even years to fix. (The US trade deficit with China was USD 80 billion annually in 2001; in 2016 it was nearly USD 400 billion.)
Another point of difference between Trump and his chief advisor was the fact that Trump liked and admired China.
Xi responded. He pledged to buy American beef and allow US financial companies to operate in China. Both were big items. This constituted an important first step. America would also export liquid natural gas to China. This was another large item. They would cooperate on cyber issues. Much more was to come.
The deals were part of a 100-day period of negotiation. After the 100 days ended, the time frame was extended.
Shortly after the Mar-a-Lago meeting, in May, Trump sent a representative to China’s Belt and Road Initiative (BRI) opening forum and gave his personal blessing to this gigantic project that emblemized China’s rise and its growing role in the global financial system and the world economy.
Trump’s decision to do this was very significant.
The Obama administration had opposed the BRI and the banks China had created to finance it. Obama advised, even pressured, US allies not to join. The Western media expressed its resistance; it felt threatened by the project, which it perceived would spell the end of the Western, liberal global order.
Western European countries didn’t like the fact that human rights and governance were not made part of the project or that China negotiated bilaterally with the countries involved. Japan and India opposed China’s BRI as it challenged their global influence.
Trump’s support more than counterbalanced these opponents. He also influenced some nations to stick with the project and/or join China’s initiative. Japan soon changed its position.
China also needed America’s help in getting the World Bank, the International Monetary Fund, the Asian Development Bank, and other institutions involved. Trump lent a hand.
Trump wasn’t threatened by China’s growing dominance of global economic affairs. Or, he thought he had a good bargaining position and should participate. No doubt he considered it as a positive force to help with Third World development and to facilitate peace.
Bannon basically agreed with none of this.
Trump subsequently “linked” talks on the US-China trade dispute with China’s help in dealing with the North Korea threat and US efforts to denuclearize North Korea. China agreed to a United Nations sanctions proposal. China took other steps to restrain North Korea.
As a quid pro quo, Trump offered to not pursue regime change in North Korea or seek to unify Korea (with South Korea absorbing North Korea). He said he did not want to destroy North Korea; he only wanted to stop it from building nuclear weapons and the missile delivery systems for them.
When Trump perceived that China was not doing what he thought was enough, he threatened to act alone and take (military) steps against North Korea. This was arguably a negotiating tactic. Trump hoped to get more Chinese help. The fact he set no deadline seemed to indicate he sought further discussions with China’s leaders.
Trump’s transactional approach influenced him in other ways in conducting US’ foreign policy. So too did circumstances.
Also, his realism. Military power thus became key to Trump’s foreign policy. Trump sought to restore the balance of power in Asia that America had lost during previous administrations. This would enable him to negotiate with China from a position of strength.
Chinese leaders, in fact, conceded that the US was ahead of China in military power — even though China’s military prowess was growing fast. America had the advantage of experience and a host of allies; China lacked both and this would likely last for some time. The fact that Trump had increased US spending on its military more than China was telling.
Bannon didn’t cotton to Trump’s bargaining so much or his keeping America involved in wars.
Regarding the latter, at this time Trump faced a dilemma in Afghanistan. He had pledged to get out of the war. It was America’s longest war. It had taken its toll in lives and money. Americans wanted it over. But Trump did not wish to go down in history as losing a war or allowing Afghanistan to again become, more than it already was, a base for terrorism. He thus chose to increase US troops in Afghanistan and remain in the conflict.
In so doing, Trump understood that expanding his military commitment to help the government of Afghanistan required extra money, including funds for economic aid. America could not afford much. China would help. Trump also grasped the fact that Pakistan was important to his efforts to win in Afghanistan. Again, money was critical and China was Pakistan’s biggest provider of foreign aid and investment. Trump needed China.
Bannon stuck to his view that the US should forthwith get out of the “prolonged and pointless” Afghanistan War and the US should not depend on China for help.
Trump faced another problem that was connected to China. He promised to fix America’s sagging infrastructure. But he realized he would likely face difficulties getting funding from Congress. So, he looked to private investors. China might help.
Another point of difference between Trump and his chief advisor was the fact that Trump liked and admired China. Trump’s fondness for China was witnessed by the fact his granddaughter was studying Chinese and speaking it daily and he often boasted about it. He even used her to entertain and impress Chinese visitors.
From what he said both in public and in private, Bannon didn’t like China.
Adding to Trump’s attraction to China was that he was acutely aware that the Western media disliked China as much as it abhorred him. In other words, Trump viewed the US and China as having a common adversary. The Western media was doggedly unfair to both and showed bias (often extreme) in reporting on them.
Not coincidently, Bannon’s news outlet, Breitbart, had long expressed dislike of China and recommended a hostile policy toward China, much as the liberal Western media did.
The bottom line was that Trump favored negotiating to get things done and was optimistic about US-China relations. Bannon espoused a zero-sum perception of US-China relations and saw China very differently.
This goes far to explain Trump seeing Bannon’s exit from the White House team of advisors.