Steve Bannon – who claims to have helped President Trump draft the battle plan for the ongoing trade war, says that Trump’s strategy is to make the conflict “unprecedentedly large” and “unbearably painful” for Beijing, according to an exclusive interview with the South China Morning Post

The ultimate goal, says Bannon – is not just to force China to give up its “unfair trade practices,” but to “re-industrialize America” since manufacturing used to be the core of the nation’s power. Bannon also criticized the “Made in China 2025” plan for Beijing to catch up with the West in 10 key tech sectors – saying that Chinese firms were relying in generous government support to reduce future technological reliance on the West.

Bannon, who claimed to have helped Trump draw up the trade war plan, said that in the past, tariffs had been limited to imports of between roughly US$10 billion and US$30 billion but the sheer magnitude of the more than US$500 billion in question this time had “caught Beijing off guard”.

“It’s not just any tariff. It’s tariffs on a scale and depth that is previously inconceivable in US history,” Bannon said.

He said Beijing had relied on “round after round of talks” to take the momentum out of the US punitive measures, but the delaying tactics would not work.

“They always want to have a strategic dialogue to tap things along. They never envisioned that somebody would actually do this.” –SCMP

Bannon says he and Trump were convinced that the US would win a trade war, and that Chinese elites were worried about the same, with “so many senior Chinese officials exhausting all channels” in order to move their money out of China and snap up West Coast and New York real estate.

“Why [does there have] to be massive capital controls placed on Chinese money? Otherwise all will flee to midtown Manhattan … They want to buy real assets in the US. That shows you a dramatic lack of confidence in their own economy.”

Bannon says he first discussed the idea of a trade war five years ago with then-senator Jeff Sessions, and that the plan to crush Beijing in trade had been at the top of their campaign strategy.

This is where Jeff Sessions and I sat in 2013 as we were trying to imagine what the 2016 presidential election would look like,” Bannon said in his “Breitbart Embassy” townhouse near the Capitol Building in Washington. “We made trade the top issue, when trade was not even among the top 100 issues of the others.” –SCMP

While Trump and Bannon have had a public falling out since his January firing – with the President criticizing the former Breitbart executive chairman for letting journalist Michael Wolff into the White House for material on his book Fire and Fury, the President and Bannon were back in contact in May according to the Wall Street Journal.

During his first meeting with Trump in 2015, both men agreed that the Washington and Wall Street establishment would “side with China” in the upcoming trade war, and that the two decided to alter the international trade regime to “dramatically reduce [the US] trade defecit” and re-industrialize America; particularly in the so-called rust belt.

Bannon added that Trump would “never back down in the trade war [with China]” despite anticipating that the policy would face “massive resistance domestically and internationally” because of “Western elites” who are working with China to make themselves rich.

Our factories got shipped out of here. Wall Street made a fortune. The private equity made a fortune. Right now President Trump’s focus is on stopping it,” said Bannon.

Apart from imposing the unprecedented tariffs, the Trump administration would use Section 301 of the Trade Act to press China on intellectual property rights and stop Beijing from forcing American companies to transfer their technology to Chinese partners, the former chief strategist said.

Section 301 authorises the US president to retaliate against any action that violates an international trade agreement or is unjustified, unreasonable or discriminatory, and that burdens or restricts US commerce.

Bannon said Washington should also retain some ability to “cut off” some key parts of the supply chain with China when necessary – as it did in the case of Chinese telecommunications giant ZTE.

Trump banned sales of American technology to the company in July, almost bankrupting it and putting up to 100,000 highly paid Chinese jobs in danger before lifting the ban. –SCMP

“It is very important to the Chinese audience [to remember] the case of ZTE. The central theme of Made in China 2025 is that the Chinese are trying to get off the supply chain – the component parts of the supply chain – of the West. The Chinese are very vulnerable there. Their government should never allow them to get into a situation with all this aggressiveness in their trade policies.”

In the end, SCMP notes, Bannon says that the trade war and US tariffs are about more than just the economy and rebuilding American manufacturing:

“The elites and the media are trying to convince you that this inexpiable leaving of the factories and jobs is but a law of physics. The opposite is actually true – it is the human action which did it. It can be reversed and it will be reversed,” he said, adding “[The] tariff is about human dignity and human pride … Not everyone wants to work for an insurance company.”


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