President-elect Donald Trump's vision for America likely will succeed or fail by the way he handles China. Jingoism has been omnipresent throughout Trump's campaign and from the sound of it—er, the Tweet of it—this won't be going away anytime soon once Trump assumes his place behind the desk at 1600 Pennsylvania Avenue. In the crosshairs is China—particularly the trade agreements we have with the world's second-largest economy.
There's no denying that the U.S. hospitality industry and China are inextricably linked. Not only do Chinese investors buy U.S. hotel real estate—to the tune of some $5.13 billion worth last year—China is a heavy manufacturer of goods that the U.S. hospitality industry imports. Even Donald Trump's newest hotel in Washington, D.C., has been infiltrated by "Made in China" products.
Even these Trump Hotel branded umbrellas are made in China, not here in the U.S.. pic.twitter.com/aw4q5nj8H8— American Bridge (@American_Bridge) September 16, 2016
Inside the Trump Hotel in Washington, DC: bedding made in China, not the USA. pic.twitter.com/lmI5MpBKm4— American Bridge (@American_Bridge) September 16, 2016
Singling out a Trump hotel, however, is not done out of derision; rather, to show just how dependent the industry is on—let's face it—cheaper goods, which, invariably, are made in and come from China. And if a luxury hotel like Trump's is flecked with Chinese-made products, it's no stretch to say that downscale properties—limited- and select-service—will have even more.
According to the Office of the the U.S. Trade Representative, U.S. goods and services trade with China totaled an estimated $659.4 billion in 2015, of which imports were $497.8 billion compared to $161.6 billion worth of exports. The U.S. goods and services trade deficit with China was $336.2 billion in 2015.
Drilling down further, the top three import categories in 2015 were: electrical machinery ($133 billion), machinery ($104 billion) and furniture and bedding ($28 billion).
It all doesn't sit too well with Trump. It gives him such discomfort that he has publicly floated the idea of a 45-percent tax on all imports from China, a move to bring back manufacturing to the U.S.
During a meeting with The New York Times' editorial board, Trump said:
“The only power that we have with China is massive trade...."I would tax China on products coming in. I would do a tariff, yes—and they do it to us....“I would do a tax and the tax, let me tell you what the tax should be...the tax should be 45 percent."
Beyond China, Trump has also dismissed the idea of the Trans-Pacific Partnership (TPP) trade deal (of which the U.S. under President Obama is party to), stating he will abandon it the first day he takes office. TPP is a trade agreement among 12 Pacific Rim countries, not including China, that aims to deepen economic ties between these nations, slashing tariffs and fostering trade to boost growth.
Which brings us to Donald Trump's latest appointment: Robert Lighthizer as his chief trade negotiator, a role responsible for better deals aimed at reducing U.S. trade deficits.
Lighthizer, a partner at powerhouse law firm Skadden, Arps, is not new to politics. He was a former deputy U.S. trade representative under former President Ronald Reagan, who, as Reuters points out, "helped to stem the tide of imports from Japan in the 1980s with threats of quotas and punitive tariffs."
This time, instead of the Land of the Rising Sun, it's The Red Dragon.
Of Lighthizer, Trump said he would "fight for good trade deals that put the American worker first."
"Years of passivity and drift among U.S. policymakers have allowed the U.S.-China trade deficit to grow to the point where it is widely recognized as a major threat to our economy," Lighthizer wrote in 2010 congressional testimony. "Going forward, U.S. policymakers should take these problems more seriously, and should take a much more aggressive approach in dealing with China."
A lot of the world's answers should come on Jan. 21, the day after Donald Trump takes the office of President of the United States. How he intends to deal with China will go a long way to how the U.S. hospitality industry deals with procurement and supply-chain questions.
When we approached one purchasing company executive about this very question, his response was one of agitation and perturbation: "Don't get me started," he said.