China Trade Deal?

We’ve been saying ever since Trump trumpeted his new “deal” with China last week that nobody gets credit for partially fixing a problem they created themselves. Well, it turns out that it’s worse than that. Here’s the upshot from the Washington Post Finance people this morning:

“[N]ews this morning that the Chinese want to hold more talks this month before President Xi Jinping signs an agreement is adding to investor skepticism.

Here’s what it does: 

  • Suspends a tariff increase, set to bite this week, that would have raised duties on $250 billion of Chinese imports from 25 percent to 30 percent. 
  • Pencils in $40 to $50 billion in new Chinese purchases of U.S. farm products, though Beijing has yet to confirm this. 
  • Gives American financial services firms expanded access to the Chinese market, according to Trump. This process was already underway
  • Addresses U.S. concerns about Chinese currency manipulation, though U.S. officials offered no details. 

Here’s what it doesn’t do: 

  • Lay out its terms on paper. (“I don’t think it should be a problem getting it papered,” Trump said.)
  • Address structural reforms that the United States has demanded of the Chinese, including an end to forced technology transfers and state subsidies for favored industries. 
  • Specify steps the Chinese will take to enforce intellectual property protections for U.S. companies.
  • Include enforcement mechanisms to ensure the Chinese abide by the terms of a final deal.
  • Remove tariffs already in place on $360 billion of Chinese imports. 
  • Suspend a major tariff escalation, of 15 percent on $156 billion of Chinese goods — many of them consumer products — set for Dec. 15. 

In short, then, it appears the U.S. traded suspension of the next round of tariffs for stepped-up agricultural purchases — though the Chinese haven’t confirmed their commitment and the timing of the purchases remains sketchy. Most everything else remains to be determined. Or as Derek Scissors, a China expert at the American Enterprise Institute who advises the White House, put it to The Post’s David Lynch:

“It’s basically some purchases and a bunch of fluff because no one in the administration really wants to go through with the tariffs anyway.”

That’s from a Republican!

Read the full story: Finance 202, Washington Post

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