‘Tremendous’ trade deal still out of reach
Details are lacking in ‘Phase One’ agreement
WASHINGTON – President Donald Trump sent stock prices soaring in October when he announced the U.S. and China had reached a preliminary deal to help American farmers, turning down the temperature of a trade war raging since last year.
Two months later, after Trump said Friday he is closer to signing that “Phase One” deal with China, market reaction was muted and the White House scrambled to explain what concessions the Chinese made in exchange for lower U.S. tariffs.
The ups and downs in the monthslong talks over the initial deal underscore the challenges Trump faces as he now tries to broker a broader agreement to open China to American products, protect the intellectual property of U.S. companies and end a trade war that began in early 2018 with tariffs on Chinese solar cells and washing machines.
The outcome of the broader talks could have enormous consequences for the U.S. economy, Trump’s reelection next year and the long-term economic ties between Washington and Beijing.
After looking at the preliminary agreement, several experts said they believe the U.S. and China are no closer to realizing those goals.
“I’m not terribly optimistic that there is such a deal before the next presidency,” said Peter Petri, a professor at Brandeis University. “The Chinese will be very reluctant to make such a deal over the next few months.”
Trump described the Phase One agreement Friday as “tremendous” and “phenomenal.” But neither the White House nor the Chinese provided the text of the deal, which Trump officials acknowledged had not yet been signed.
As part of the deal, Trump shelved plans to impose new tariffs on $160 billion of Chinese smartphones, electronics and other goods that had been set to take effect Sunday. He also cut the tariff to 7.5% from 15% on another $120 billion in Chinese goods.
Democrats pounced on the lack of detail while the Dow Jones industrial average, after a brief spike, hovered in flat territory most of Friday.
“He has sold out for a temporary and unreliable promise from China to purchase some soybeans,” said Senate Democratic Leader Chuck Schumer, an occasional supporter of Trump’s China trade policy.
China will increase U.S. farm purchases by $32 billion over the next two years, officials said. The White House was less clear about what changes China will make to address concerns about protecting intellectual property of U.S. companies doing business there.
Finalizing a broader trade deal between the world’s two largest economies has proven tough, with China demanding the U.S. remove some tariffs and Trump pushing Beijing to enact measures on intellectual property and the forced transfer of technology.
Trump remains adamant an agreement can be reached. He said Friday he doesn’t plan to begin talks on a Phase Two deal until after the 2020 election.
“This is just the beginning,” said Craig Allen, president of the U.S.-China Business Council.
As the talks dragged on, Trump tried to tamp down expectations of a quick resolution for the initial agreement. Several experts expressed skepticism about the outcome of those talks Friday, and the chances for addressing the underlying issues with China.
“The fighters have retreated to their corners and may not return to the ring,” said Robert Daly, director of the Kissinger Institute at The Wilson Center.
“The Trump administration is calling this ‘Phase One’ of a trade deal with China, but there is little reason to expect a phase two or three,” he said. “The Chinese side has already won a respite from continual American threats and appears to have done so without offering any terms it wasn’t prepared to give in 2017.”