Trump Throws in the Towel on Phase 2 Deal With China


Phase 2 and likely even phase 1 of Trump's are headed for the gutter.

Deal Hopes Fading Fast

I Don’t Think About It Now,’ Says Trump, as Hope for a Deal Dims.

The president’s announcement that phase-two talks are on the back burner also means that U.S. tariffs on imports from China are unlikely to be removed soon. The U.S. has imposed tariffs on about $360 billion a year worth of goods from China. As part of the deal struck in January, the administration cut the rate from 15% to 7.5% on about $110 billion worth of goods, while leaving tariffs on the rest at 25%.

Talks initially focused on a comprehensive deal, but fell apart in May 2019, resulting in an escalation of tariffs. The U.S. accused the Chinese negotiators of backtracking in the talks. When negotiators revived talks in the fall, they focused on a narrower set of issues.

At the time, Mr. Trump said that the U.S. and China would begin negotiating phase two “right away.”

All Talk, No Delivery, Just Tariffs

Trump has been all mouth and no delivery right from the start.

  1. The original pledge of forcing China to the table via tariffs failed.
  2. Trump then pumped up a phased deal.
  3. China never lived up to its pledge, partially because of Covid, but also other factors. 
  4. Anyone with an ounce of common sense knew phase 2 would be another broken deal. 

In regards to point 3, Trump labeling Covid as the China virus did not help, nor did cancelling Chinese student visas, nor did his stance on Hong Kong. 

End Results

  • The US trade deficit with China is about where it was in 2016. 
  • US farm exports to China plunged.
  • US consumers pay higher prices. 

Phase One Recap

Let's review what I wrote on January 13, 2020 in Trump and China to Sign Trade War Ceasefire.

Ceasefire, What We Know

  1. China to Resume Buying US Agricultural Exports
  2. No Economic Policy Reforms in China
  3. Tariffs Remain
  4. Hooray, Bi-Annual Meetings
  5. Phase 2 In Doubt
  6. China Says it Won't Flinch from Confrontations
  7. Most Details Remain a Top Secret
  8. Trump Ends Currency Manipulation Charge

That's All?

Yes. After two years of brutal escalations, a trade war ceasefire is all we get from alleged super-duper wheeler dealer Trump. This is a ceasefire that Trump could have had at any point in the last two years.

Moreover, we are worse off then when we started and tariffs still remain.

Art of No Deal

It took Trump two years to negotiate that ceasefire that has now blown up because China is not even honoring its ceasefire commitments.

But let's go back even further.

 "Trade Wars are Good and Easy to Win"

Flashback March 2, 2018: Trump Tweets "Trade Wars are Good and Easy to Win"

This was my key comment: "In one Tweet, Trump proves he understands neither trade math nor trading partner psychology."

Amazing Talent

It takes talent to fail that miserably. Not anyone can fail consistently while bragging about wins the entire time.


Comments (48)
No. 1-19

Mish, I have been reading you for years and value your views on economics and markets. Frankly, I do not think people are interested on your views on Trump as all we need for this is CNN or MSNBC. You have so much Trump that as soon as I see his name on your site I go somewhere else. Please, no more Trump.


Would love to see Trump”s college transcripts - you would think a stable genius would want the world to see that he is smart. Based on his tweets he seems to have a poor command of English, Geography, and History to say the least.


"Trump Throws in the Towel on Phase 2 Deal With China" because of the tropical storm slamming Portsmouth, NH.


President Nothingburger


tRump will break any deal that does not benefit him anymore. So other parties must be idiotic to keep full commitments in any deal with tRump.


"Trade wars are easy to win". Trump is making China great again. Are we sure he's a Russian agent?



How can you post and move in a Uhaul at the same time? Wife behind the wheel?



Another interchangeable title: “Trump throws in the towel on [China/DACA/Border wall/Draining swamp/Rallies/insert election promise here]”

Waiting for the “mask” one.


Lol: Breaking News.....Trump wearing a mask!!!


The title of this article reminded me of:


Trump is a one trick pony. It's all about the politics of hate. Garner support by targeting a group with your hate. Trump has targeted:

Deep state
Foreign Students
World Bank
Trade Groups
Many states and cities
The press
The courts
Every previous president
Etc etc etc

He has spent his entire life picking fights, bullying anyone he can and holding grudges.

He is a compulsive liar and an extreme narcissist.

He certainly can't be trusted to keep any agreement he makes. There is no point even trying to negotiate a trade agreement with him involved.

Fortunately, most of the negotiating of trade agreements is done in good faith by others. The negotiating only gets screwed up when Trump involves himself personally.

Statements such as ”trades wars are good and easy to win” simply show what an idiot he is.

Sadly, he also believes it's easy to win a war against a virus by talking it into disappearing, and then ignoring it.

I can't imagine a worse time in America’s history to have the most inept president ever.

My condolences.


Sooooo much winning it hurts.



In Vail Co for the evening. Dead tired. 2/3 of the way to our new home in Utah.


A bankrupt country needs a bankrupt president. It’s a good fit.


Trump trashed all of our allies. You can’t take on China alone. Trade wars are like real wars - jobs die in both sides. Remember how the Republicans killed the TPP? That was our best chance, but no one will trust the US in a joint deal again.


Understanding the core nature of China is important to comprehend the lack of flexibility ingrained in their system. This comes in the ideology that directs its actions. China is still very much a communist country, and the Chinese Communist Party (CCP) controls everything. While it may appear both State-owned and private firms operate within China's economic system. This is mostly an illusion following economic reforms in the 1980s.

In reality, the communist system does not allow for true private ownership and views all "tech innovation" as essential to its national interests. Thus, private and state-owned Chinese firms act in the interest of the Chinese regime when it comes to foreign investments in the high-tech sectors. Below is the second part of a part-two series which explores why China is on a one-track path and blind to other options going forward. This is a recipe for conflict.


Captain Ahab
Captain Ahab

There used to be a time when comments exhibiting critical thinking were a key feature of Mish's website. It would occur irrespective of the subject matter, often with insight, not simply agreeing or disagreeing, but driving debate, stimulating understanding, and at times, even innovative approaches. When 100% of comments are all saying much the same thing, I wonder if it isn't time to move on.
To be fair, I 'liked' one comment (directly preceding mine). The 'recipe for conflict' comment is particularly apropos.


Does this mean we won? Cos winning trade wars is easy.


Curious how a Financial guy would neglect the 75 billion dollars a year in Tariffs
being collected and spent by TRUMP for the good of the people.
Hopefully China plays nice or the tariffs go back on OR UP. At Trumps discretion.

Why does everyone always forget that America is currently at the mercy of China's
manufactured goods, But China can't feed it self or fuel itself.

I know which hand I would rather hold.

Global Economics