As expected, Donald Trump is hailing this as a huge triumph over China.
In reality, it is only a small improvement in trade relations with China that fundamentally preserves the global free trade status quo.
“WASHINGTON — President Trump signed an initial trade deal with China on Wednesday, bringing the first chapter of a protracted and economically damaging fight with one of the world’s largest economies to a close.
The pact is intended to open Chinese markets to more American companies, increase farm and energy exports and provide greater protection for American technology and trade secrets. China has committed to purchasing an additional $200 billion worth of American goods and services by 2021 and is expected to ease some of the tariffs it has placed American products.
But the agreement preserves the bulk of tariffs that Mr. Trump has placed on $360 billion worth of Chinese goods, and it maintains the threat of additional punishment if Beijing does not live up to the terms of the deal. …”
The trade deal with China is similar to everything Trump has done in office. He also also renegotiated NAFTA and the free trade deal with South Korea.
China has agreed to buy $200 billion more agricultural products, manufactured goods, energy and services over two years and Trump can reduce his tariffs before the 2020 election which Midwestern farmers have complained about, declare victory in his trade war and claim he has made progress on reducing the trade deficit, but ultimately it does little to change the status quo. This is not going to reverse the last 20 years of staggering trade deficits.
How has Trump’s slightly revised and rebranded trade deal with South Korea played out? The original free trade deal with South Korea was negotiated by George W. Bush in 2007 and went into force when Barack Obama was president in 2012. The first thing that Obama did after losing the 2010 midterm elections in the great Tea Party uprising was to go to South Korea to work on that trade agreement. Trump bitched about it and preserved it.
U.S. Trade Deficit With South Korea (In Millions)
2010: -10,054.5
2011: -13,199.7
2012: -16,616.4
The deal goes into effect in March 2012.
2013: -20,721.7
2014: -25,027.3
2015: -28,291.3
2016: -27,624.6
Donald Trump becomes president in 2017. There is going to be so much winning that your head is going to spin. He promises you will be tired of winning.
2017: -23,066.0
2018: -17,757.4
Initially, the trade deficit with South Korea declined after Trump became president. He denounced the South Korea free trade agreement as a horrible deal. He said “we’re getting destroyed in Korea.” In September 2018, Trump signed his new renegotiated and rebranded Trump free trade deal with South Korea.
2019 (Without December): -19,261.5
Source: U.S. Census Bureau
A year later, the trade deficit with South Korea has increased over what it was before Trump renegotiated the free trade deal. In 2018, the trade deficit with China under Trump swole to $419 billion dollars, which was its highest level ever. Similarly, illegal immigration to the United States more than doubled in FY 2019 although it has come down since then. George W. Bush, Barack Obama and Donald Trump produced the same result with South Korea.
Is it going to be any different with China this time? How about NAFTA 2.0 with Mexico and Canada? I doubt it.
Trump is a businessman, he thinks like one, acts like one, he is one. His motto should be: “The business of America is business, what’s good for business is good for America. Get those wages, down, down, down and profits up, up, up.” That is, until the country collapses from debt, debt, debt.
The general mindset of viewing all policy and people through an economic lens distorts reality and removes humanity completely from view. That’s one of the main problems with both conservatism and libertarianism. Strong tariffs protect the development of industries within the country, which leads to self-sufficiency within its’ borders. Libertarians argue against tariffs on purely economic grounds, as if people are just units to be measured against profit and loss. Even if it’s more economically efficient for Americans to have unfettered access to cheap Chinese goods, those imported goods eventually destroyed the American industrial base. Some things matter more than immediate monetary gain.
Since Bretton Woods our economy is designed around running trade deficits with every other country in the world. That’s literally what it means when they say the US dollar is the world’s reserve currency. It means other countries have to have reserves of the US dollar in their banks and they acquire that with trade surpluses against the US.
This isn’t just some consequence of capitalism either. Jews literally got together and constructed our modern economy in such a way that it would gut the middle class forever. So no, Trump isn’t gonna go “tough on China”. it’s a pipe dream like everything else he promised.
As a midwest farmer, I endorse this. Farms have born the brunt of this trade dispute.
It was gay to think tarrifs would do what he said they would. All they did was disrupt supply chains.
If they had been paired with incentives to companies to move their supply chain back to the U.S. permanently, then it might have reversed some of this. Thats not what happened though.
Grain prices are too low, supply too high. Its essentially zero cost for a huge buyer like china to weaponize their demand against U.S. farmers.
You are wrong to portray all farmers as corporate machines. Even the bigger operations are still family owned with alot of good paying White jobs.
You are correct, there should have been incentives for manufacturing supply chains to move back here along with tariffs. Instead there were massive stock buybacks which helped elevate the stock market enriching a tiny slice of the country with crumbs for others. The tariff program was not well designed.
China and other parts of Asia will probably always need to import lots of food because of natural limits on agricultural resources combined with huge populations. I can’t find the source now but I have read that China is at something like 130 -140 % of its Malthusian limit i.e. 30 – 40 % beyond their own ability to produce enough food to feed themselves under present conditions. The U.S. is at something like 60 % of our Malthusian limit, under present conditions, a huge strategic advantage.
China has historically had problems with food supplies and the current regime in Peking is acutely aware of the problems a hungry population can cause. Much of China’s arable land near the coasts has been used for urbanization exacerbating their imported food dependency. U.S. farmers are a strategic advantage in dealing with China if this advantage were used wisely. It appears Trump ruined another opportunity to do things right with his screwed up trade deal.
IronicSockAccount,
Well you are tough. You took a massive attack on the Iranian being killed——–probably murdered from a moral view point. Yet here you are continuing as calm as ever.
From a latin girl’s viewpoint all male virtues flow from courage.