Check out my radio interview last week on the state of the much hyped US-China Phase 1 trade deal. (Listen to first 5 minutes of Critical Hour radio show for my comments, from link posted at end of this article post).
Since Trump and US trade rep, Lighthizer, declared last week that US-China have a ‘done deal’, it has been increasingly reported the deal is not done or signed off. In the interim, Trump and friends continue to exaggerate dimensions of China commitment to buy US farm and other goods. From an initial declaration of $8B more (over $24B in 2017 base) in each of next two years–i.e. $16B–Trump hyperbole now saying $40-$50B in each of the next two years for farm goods purchases by China, and $200B over the next two years ($100B per year) for all China purchases.
But China refuses to say how much and when it will increase purchases. Why? Because it has always made clear the amount purchased will depend on the amount of still existing tariffs Trump will remove. For China, it is always a ‘quid pro quo’ for tariff reductions.
But Trump wants to keep tariffs on $250B (at 25%) and on $130B (at 7.5%) to go after China again in a Phase 2 next year. So China won’t agree to buy more unless Trump reduces tariffs more, and Trump won’t do it. (Did he make some assurance to his neocon, anti-China, pro-US Pentagon trade faction he’d keep the tariffs if they went along to decouple tech demands on China to allow Trump to sign a Phase 1 min-deal trading tariffs for farm purchases?).
So Trump now between a rock and a hard place, as they say: Cut tariffs more to get China to buy more farm goods (as his midwestern farm base gets more antsy and threatens to drop their support in 2020), or keep the tariffs to retain support of his anti-China neocon and military industrial complex wing?
If no more tariff reductions, then Trade War with China is over. What you see is what you get in 2020: Half of Trump tariffs on China remain and China buys token more farm goods no more than $8-$16B. China may ‘talk’ about buying more but that’s just enticement talk to get Trump to reduce more.
China total imports from US on everything–farm, energy, services, etc.–in 2017 was $186B. Trump’s declared $100B overnight increase, in both 2020 & 2021, an impossible ramp up.
Per the Wall St. Journal December 19, 2019, China government to date “has made no mention of the purchase targets announced by U.S. officials”. US economists and trade experts don’t see how China could ramp up to $50B a year, let alone $100B. So, just more typical Trump unbelievable exaggeration and hyperbole. But stock market lemming investors love it.
TO LISTEN TO MY INTERVIEW by the Critical Hour Radio Show, (timeline 0-4:40 minutes into the show) on the China-US trade deal ‘fiction’,
GO TO: https://drive.google.com/file/d/1Qj2qrjf5CKWoAUF3h9TLeiThkGN1YtZs/view
(And for my 20 page coverage of the origins and evolution of the US-China trade war, read my Chapter 8 (Trump’s Neoliberal 2.0 Restoration) in my just published book, ‘The Scourge of Neoliberalism: US Economic Policy from Reagan to Trump’, Clarity Press, January 2020).
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