In mid-October, the Trump Administration announced a deal with China on Trade. It sounded great, but within days, the Chinese were asking for more. They wanted assurances that mid-December Tariff hikes would be shelved. It wasn’t part of the mid-October announcement.
Part of Phase I of this deal is a handshake agreement. China will triple its agricultural buys. Up to 50 billion in US Farm products over the next two years. …“The agreement also opens up China’s financial services markets to American companies, covers currency manipulation, and addresses some aspects of intellectual property and technology transfer agreements. Phase 2 negotiations will begin immediately.”
It all sounded good, and it put an end to Mid October Tariff increases. But as noted above, the Chinese wanted December hikes killed off too. Trump used it as intended, I assume, and we’re back on track for a Trade Deal with China.
President Donald Trump signed off on a so-called phase-one trade deal with China, averting the Dec. 15 introduction of a new wave of U.S. tariffs on about $160 billion of consumer goods from the Asian nation, according to people familiar with the matter.
It’s all verbal, handshake business for now. There’s a framework from which the legal text will be written. Farmer’s will be happy. The Stock Market was excited as well, reaching new highs on speculation a deal was imminent.
In addition to a significant increase in Chinese agricultural purchases in exchange for tariff relief, officials have also said a phase-one pact would include Chinese commitments to do more to stop intellectual-property theft and an agreement by both sides not to manipulate their currencies.
I’d expect to see eye-glazing-over details next year sometime. President Trump won’t give the Chinese too much rope unless it’s enough, as the saying goes. And we know as they must that at the slightest provocation he will drop the trade hammer.
China has never had the upper hand in this, as we’ve explained in the past. They need America to buy their goods. Trump is the first President to use that to get a better deal for American workers. He promised us this when he ran, and he’s working hard to keep the promise.
And it all sounds good. But until we have a signed deal, it’s not over. It’s just a framework and a handshake. But it’s still progress.