If only Nixon could go to China, perhaps only Trump could get them to revisit trade. It’s not a stretch. No one has made any serious effort to insist on a better deal for the United States. But today, President Trump and Chinese Vice Premier Liu are scheduled to sign the phase 1 agreement.
It’s not perfect. We should expect more on intellectual property rights. And while China agrees not to meddle with its currency to gain trade advantages it will continue to subsidies to companies that give them a significant price advantage.
It’s Called Phase 1 for a Reason
The process is being developed in multiple phases. Phase I is 86 pages long and includes some great things for American agriculture and manufacturing.
The centerpiece of the deal is a pledge by China to purchase an additional $200 billion worth of U.S. goods over two years to cut a bilateral U.S. trade deficit that peaked at $420 billion in 2018.
A source briefed on the agreement told Reuters that China will purchase an additional $80 billion worth of U.S. manufactured goods over the two year period, including aircraft, autos and car parts, agricultural machinery and medical devices.
Beijing will boost energy purchases by some $50 billion and services by $35 billion, while agricultural purchases will get a $32 billion lift over the two years, all compared to a 2017 baseline of U.S. exports to China, the source said.
Many of the Tariffs are still in place after phase one. Reuters reports phase I “canceled planned U.S. tariffs on Chinese-made cell phones, toys and laptop computers and halved the tariff rate to 7.5% on about $120 billion worth of other Chinese goods, including flat panel televisions, Bluetooth headphones and footwear.”
But it will leave in place 25% tariffs on a vast, $250 billion array of Chinese industrial goods and components used by U.S. manufacturers.
The key, of course, is this. China signing the deal is no guarantee they will follow it or follow the spirit. They may be playing along hoping that come November a Democrat wins the office they can drop the pretense and go back to business as usual.
If Trump wins, they know they will need to take things more seriously.
A signed deal is a win for Trump, either way. And we can feel confident there will be pressure to keep promises and a price to pay if that does not happen.
As with all things involving communists, socialists, and other tyrants, they lie a lot. Only time will tell, but for the moment, this is a step in the right direction.
One more point. The Left is spinning this as anything but a win. But these are the same people who didn’t want Trump to do anything about Trade with China. They are right to want more (I want more) but it is disingenuous of them to whine about what hasn’t happened yet (while ignoring what has) when all along they wanted nothing.