Trade Lie of the Day: Kudlow Claims US Exports to China Will Double


Round one of the US-China trade deal is allegedly "absolutely done". Let's investigate that and other claims.

Absolutely Done

Larry Kudlow, Director of Economic Council, says Trade Deal 'Absolutely' Done, U.S. Exports to China Will Double.

The so-called Phase One trade deal between Washington and Beijing has been “absolutely completed,” a top White House adviser said on Monday, adding that U.S. exports to China will double under the agreement. “They’re ... going to double our exports to China,” National Economic Council Director Larry Kudlow told Fox News Channel.

Double? Really?

Under the trade agreement announced last week, Washington will reduce some tariffs on Chinese imports in exchange for Chinese purchases of agricultural, manufactured and energy products increasing by about $20 billion over the next two years.

US Trade Facts

Let's see what the US Office of Trade has to say about trade with China.

  • Goods exports totaled $120.3 billion; goods imports totaled $539.5 billion. The U.S. goods trade deficit with China was $419.2 billion in 2018.
  • U.S. goods exports to China in 2018 were $120.3 billion, down 7.4% ($9.6 billion) from 2017 but up 72.6% from 2008. U.S. exports to China account for 7.2% of overall U.S. exports in 2018.
  • The top export categories (2-digit HS) in 2018 were: aircraft ($18 billion), machinery ($14 billion), electrical machinery ($13 billion), optical and medical instruments ($9.8 billion), and vehicles ($9.4 billion).
  • U.S. total exports of agricultural products to China totaled $9.3 billion in 2018, our 4th largest agricultural export market. Leading domestic export categories include: soybeans ($3.1 billion), cotton ($924 million), hides & skins ($607 million), pork & pork products ($571 million), and coarse grains (ex. corn) ($530 million).

Math Check

If China buys an extra $10 billion a year the increase will be 10 / 120.3 = .083 or 8.3%.

Since double means 100%, I would like Kudlow to double check his numbers.

Deal Done?

"Absolutely," says Kudlow.

But asked if officials still planned to sign the deal the first week of January, Kudlow said: “That’s the hope.” Translations were still being worked out but he did not expect any changes to the final Phase One agreement, he added.

So, there may or may not be changes, but but the deal is absolutely done.

What About Phase Two?

  • Kudlow: “Phase Two and its outcome will depend in some way on the success of Phase One. The two are going to be linked.”
  • Trump: Negotiations on a Phase Two trade deal between the two economic giants would start immediately.

Kudlow says phase two depends on phase one, but Trump is ready to blast ahead now.

Mysterious Details

At long last we absolutely have a deal. But what the hell is in it?

On December 14, I commented Trump's Amazing Trade Deal: Details a Complete Mystery

Can't Look Under the Hood

OK. China will buy some more soybeans, but probably no more than they were buying before. In return, Trump phases out some tariffs. Otherwise it's top secret. Shhhh.

Neither government submitted a full text or even a detailed summary of the deal, hamstringing efforts to determine the winners and losers in the world’s two biggest economies or the quality of the agreement.

US Agrees to Buy More Ag Products From China

China will not disclose it's actual commitment. And the US won't do so either. But this line caught my eye.

Chinese officials, declining to specify how much China expects to buy from the U.S. as part of the near-term deal, also said the U.S. had agreed to increase its imports of Chinese agricultural products.

This is hard to digest without specifics, but it appears China will buy more soybeans if the US will buy more baby food, water chestnuts, or dog food.

Urgent Task

Liao Min, China’s Vice Finance Minister and a trusted aide to Mr. Liu, the chief negotiator, said: “The urgent task right now is to get the phase-one agreement signed and implemented.”

Silly me. I thought the urgent task was to keep everyone from looking under the hood.

Of course, that presumes there is a car.

Things That are a Mystery

  1. Kudlow's math.
  2. Intellectual property.
  3. What's under the hood? Specifics of all kinds, but especially the agricultural products of China the US agreed to buy more of.

Trump's Plan

Somehow Kudlow was not in the loop, but Trump wants to play the "deal in progress" story for another 9 months, starting "immediately".

Things in the "Not a Mystery" Category

  1. Phase Two will be the best trade deal in the history of the world.
  2. The deal will be so good, it will even surprise Trump.

Someone, please get Kudlow in the loop.

Oh, also sign him up for a math lesson.

Mike "Mish" Shedlock

Comments (21)
No. 1-12

Impending trade deals are what's keeping the market up. There's little chance an actual deal could work as well as the rumors.

Tony Bennett
Tony Bennett

Wall of liquidity from central banks moving markets ever higher.

But "they" can't admit that ... as that would imply markets not legit.

Therefore, on any given day, any given excuse will be sufficient.

As an example, in the not too distant past dialogue / deal with North Korea drove markets up. How did that turn out? Not that the markets seem to care.


Starting from next Monday, Trump will tweet “phase 2 of trade deal with China is almost complete” whenever the stock market shows decline! Long live Trump, the american people deserve you!


The most agri products that China purchased from the USA was $29B in 2013, so down to $9B in 2018 is a huge drop. In the meantime, China has diversified suppliers. NO WAY will they ever manage to ramp up to $50B, short of an environmental disaster in South America


Much like the new NAFTA, there is not much to see in this phase 1 deal. The most important thing is that Trump is not continuing to make things worse. This has been my expectation all along (that cooler heads will prevail), and that Trump will “hopefully” not cause a recession with his trade antics.

Net result: continued slow economic growth.


In the article you quote, the next paragraph says...Under the trade agreement announced last week, Washington will reduce some tariffs on Chinese imports in exchange for Chinese purchases of agricultural, manufactured and energy products increasing by about $20 billion over the next two years....

So is it $20 billion weren't we promised $40 billion or 50 billion?

And, didn't they say there were no cuts in existing tariffs just yesterday (Sunday)...The U.S. Government denied a report that its negotiators offered to cut by one half the tariff rates on $360 billion worth of Chinese imports in exchange for certain U.S. goods Beijing agreed to purchase. "No such offer was ever made to China by the United States. There is not a single knowledgeable American negotiator who would support this falsehood," US Trade Representative Robert Lighthizer and Secretary of the Treasury Steven Mnuchin said in a joint statement referring to the Wall Street Journal report in this regard.....


Did I miss something or did you read the article in today’s WSJ “Trump’s Trade Secret: Exploiting China’s Relative Weakness-so does this article have any merit at all?


As long as Americans continue to send all the money they get every month from the government straight to China,it really doesn't matter how high or long tariffs go or lasts.


If you had gone to sleep in 2007 and woke up in 2019 and found Kudlow was chief economic advisor, this alone would make your head spin.


Some Math:

Starting at around 12:30 he goes into more detail maths-wise and mentions 200 billion over 2 years, but only explained 50 billion in ag and ag-related sectors (one of four). But I don't get the impression that this trade team has a maths problem like you state. Maybe there hasn't been good explanation in detail yet and you are right to call them on that. In any case, Maria B does good interviews with clear questions and lets her guests answer. (Surprisingly unusual approach these days.)

Some more overview (first 10 mins about trade) - though no math either unfortunately - this time from Bannon, a key spokesman for the new 'economic nationalism' approach, which is both the 'America First' view, but at the same time - and more importantly - an international economic order view seeking to integrate China into the worlds's market, versus allowing it to continue as an increasingly separate entity that becomes the world's main manufacturer, a 'mercantilist totalitarian dictatorship', a model which they are trying to break by expanding the supply chain in other Asian nations and beyond. I think many fear Trump's approach is all based around his ego and some sort of America First Bully approach, but that is way too simplistic a viewpoint. Maybe what they are attempting will go up in flames, but it's not a shallow, impulsive thing they are working on....

People who build large, iconic buildings are used to working on something for ten years going through various levels of governmental and finance-related red tape. Things take time. Trump is very used to that, something which his many detractors refuse to admit whilst they keep painting him as an impulsive parvenu on some sort of teenage rampage.


Wow, I think this will effect the world a lot if it's true. A friend of mine in Canada imports a car cleaning formula he makes himself to China. The company he works for, , might not like this news. Hope all ends well.