Trump Throws in the Towel on Phase 2 Deal With China
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.
- The original pledge of forcing China to the table via tariffs failed.
- Trump then pumped up a phased deal.
- China never lived up to its pledge, partially because of Covid, but also other factors.
- 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.
- 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
- China to Resume Buying US Agricultural Exports
- No Economic Policy Reforms in China
- Tariffs Remain
- Hooray, Bi-Annual Meetings
- Phase 2 In Doubt
- China Says it Won't Flinch from Confrontations
- Most Details Remain a Top Secret
- Trump Ends Currency Manipulation Charge
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."
It takes talent to fail that miserably. Not anyone can fail consistently while bragging about wins the entire time.