This week, two key issues took over the public’s opinion: the announcement of a trade truce with China and the transmission of the articles of impeachment to the Senate. Let’s focus on the former this time.
If there is one thing Trump likes to do, it is to be an arsonist and a firefighter at the same time. First, he creates a problem, which he then pretends to resolve it by rolling back his decisions that created the issue he designed himself. After it all, the situation remains the same as it was before inventing the new problem. That is precisely what seems to have happened here with China.
Two years ago, Trump announced and escalated a Trade War with China, and, as expected, the Chinese government retaliated. Tariffs imposed at both ends reached absurd levels in a short period of time and lacked all economic rationale. This week’s announcement is the “first phase” of this “trade deal.” During this stage, both parties will return to the status quo existing before the Trump administration originated the Trade War and escalated the tariffs.
At the heart of the crossfire between the two countries, China’s tariffs on U.S. agricultural exports bankrupted or promised to bankrupt farmers in the U.S. China substituted American produce with alternatives coming from countries not impacted by their retaliatory tariffs. In “phase one,” China is merely pledging to buy $200 billion in American produce or agricultural products; however, the Chinese market has already opened to U.S. competitors, and there is no knowledge of enforcement mechanisms to this Chinese imports commitment.
Indeed, the Trump Administration has conceded that enforcement mechanisms. Furthermore, agreements dealing with the real (and unresolved) substantive issues in the China-U.S. trade relationship will be part of “phase two” of this “deal,” which not only might never happen but also makes this trade truce far from a comprehensive trade agreement. Certainly, this is simply going back to where things were before Trump started his “Trade War.”
There it is, the arsonist settling the fire he created before greater, irreversible damage was done. Nonetheless, the damage caused, in this case, hurt American agricultural producers, as well as American industries and consumers. According to Presidential trade advisor, Peter Navarro, the government could still retaliate with sanctions to disputes with the “phase one.” The White House recently agreed to cancel a 15% tariff on consumer goods that was supposed to go into effect in December. Moreover, while “tariffs were lowered on $120 billion worth of Chinese goods from 15 to 7.5%, the deal still leaves 25% tariffs on $250 billion of Chinese imports.” As a result, extending the uncertainty this distortion generates in American industries’ supply chains. On the other hand, the current situation fails to provide a better competitive platform for the U.S. than the TPP multilateral trade agreement reached by the Obama administration, of which Trump unilaterally walked away, that created putting our economy in a leading role together all major Asian economies except China, forcing them to join into those trade rules and standards over time.
Once again, Donald Trump’s art of the deal has proven to be more like the art of deception.
