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The Art of the Deal
Trump’s China Trade Deal: Much Ado About Nothing?

The Trump Administration announced its first round of successful trade deals with China on Friday, unveiling a 10-point package to renegotiate the parameters of an economic relationship Trump has long denounced as skewed and unfair. The NYT has the overview:

Under the newly announced deals, China set a deadline for fulfilling its promises to allow American beef and said it would speed up consideration of pending American applications to offer bioengineered seeds in China. It will also allow foreign-owned firms to provide credit-rating services in China, publish guidelines to let American firms offer electronic payment services there, and issue licenses to two American financial institutions to underwrite bonds. […]

The trade deal announced Thursday will also allow Chinese companies to export cooked poultry products and offered reassurance to China that it could buy liquefied natural gas from America.

The trade agreements did not address areas such as steel, aluminum or auto parts — areas where Chinese exports have a deep, industrywide impact.

The President himself was quick to tout the announcement as proof that his hardball negotiating tactics were delivering tangible results. “China just agreed that the U.S. will be allowed to sell beef, and other major products, into China once again,” Trump tweeted. “This is REAL news!”

Dig into the details, however, and the package looks rather shallow. The agreement on U.S. beef imports, for instance, merely added a deadline to an agreement already reached under the Obama administration. And the Chinese “opening” to U.S. payment processors like MasterCard and Visa likewise appeared to be symbolic, since Beijing reserved the right to issue restrictive licensing guidelines for foreign competitors. Meanwhile, China’s protected steel and aluminum industries went unmentioned, and Beijing earned a commitment to U.S. representation at Xi Jinping’s high-profile One Belt, One Road Summit this weekend.

This seems to be part and parcel of Beijing’s approach to Trump: as the Washington Post reported in March, Xi Jinping’s trade strategy was to present Trump with “tweetable promises he could present as victories.” And a version of that logic has also applied to North Korea, with the Chinese seeking to appease Trump with low-cost moves like the coal ban that he is eager to claim credit for.

Of course, it is still early days, so tougher and more substantive rounds of deal-making could happen down the road. But for now, the Chinese seem to be calculating they can get away with modest trade concessions maximized for political impact—and so far the Trump Administration appears to be proving them right.

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  • Unelected Leader

    It’s small potatoes. The Chinese Communist Party was supposed to totally open up to Ag imports as well as farming implements back in the early 2000s anyway per their WTO ascension in December, 2001.

    • Suzy Dixon

      You are sadly correct. Worse, if trump doesn’t wrap up healthcare in the senate asap and move on to tax reform by fall, it may be too late for the effects to influence the midterms. If they wait to start tax reform early in 2018 + six months after it’s settled for folks to see effects then they’ll be voting without more of their own money in the pocket, and that’s precisely what they were promised.

      • Unelected Leader

        Yes, and remember the two executive orders about a month ago? The first one was just to establish the task force that had to report within 90 days, so I guess at the end of June(?) on all of the causes of America’s persistent, unbelievably huge trade deficit….um not really necessary. The causes are pretty well understood.

        The second goes after uncollected anti-dumping and counter valuing duties…. about $2.5 billion went uncollected between 2000 and 2016. In other words, truly a drop in the bucket of America is $502 billion deficit for 2016. And don’t forget that the deficit is that enormous every year, so trillions and trillions have flowed out of the country since 2000.

        • Angel Martin

          “all of the causes of America’s persistent, unbelievably huge trade deficit….um not really necessary. The causes are pretty well understood.”

          This is the problem, repeated in every industry…

          https://www.nytimes.com/2017/03/20/business/economy/china-us-trade-tariffs.html?_r=0

          • Unelected Leader

            There’s simply no question. The jury is in. The correct answer is a degree of protectionism and currency realignment. Currency realignment is long overdue and hasn’t been done for 30 years.

            America is the worlds #2 exporter, yet it runs consistently huge trade deficits. By contrast, Germany, Japan, and China are also major exporters and they run large surpluses. These nations and their consistently large surpluses distort trade globally, not just with the US. Furthermore, the US is the most open of these markets. This is blatantly obvious looking at ratio of import/export in the USs top 20 exporting industries.

            Germany is second most open, Japan is third (really more closed) and of course china the most closed when looking at their top 20 export industries. Anyone feigning horror that the US might start to play tough like these big boys have been is just being absurd. Write them off. Twiddle your favorite index finger on your lips.

          • KremlinKryptonite

            Yep, just looking at US-china trade from 2001 to 2011 gives you a very clear picture of the damage done to the United States. That’s the first 10 years since China joined the WTO. 538,000 jobs created due to US exports. Average pay: $827/week.
            3,280,000 jobs lost due to Chinese imports. Average pay: $1030 per week.
            Net loss for the United States: more than 2.7 million jobs, including 1.1 million in computer and electronics parts manufacturing.
            Perhaps worst of all, this catastrophe depresses virtually ALL wages. As the workers displaced by the loss of jobs seek employment elsewhere, usually in non-tradable sectors, they are willing to take a significant pay cut and that decreases the bargaining power of everyone already in those non-tradable sectors.

  • ——————————

    That headline…now this is a typical MSN way to spin something done by Trump….present the story in a negative style. Is this TAI, or the NYT?
    Did the writer expect China to just swing it’s doors open immediately? This is going to be a huge ongoing negotiation that will take Trump years to complete.

    Step by step.
    These things take time….

    • D4x

      TeamTrump insured Xi’s return flight from Mar-a-Lago optimized the refueling in Alaska. Under-reported stage of the trip, complete with discussions on exports of LNG. That part of this agreement is serious. US imports of hydrocarbons have long been the core of the trade deficit; now reversing to export surplus, with more to go to China. Win-Win!

      U.S. representation at the One Belt, One Road Summit is also important – TT is very good at listening.

      Add to the NYT bias their inherent bias in favor of financial services.

      Most important is this is a fine first step in direct bilateral trade negotiation with China. Alerts Turkey, Iran, Russia, both Koreas, that the USA is doing, not talking about the next meeting to talk about the parameters that may need input from …

      • ——————————

        Yes, true. It will alert the other players…especially those who are not always thinking clearly.

        The MSM seems to think this will happen overnight, and if it doesn’t, then Trump will be seen as failing on China. But it won’t go as anyone thinks it will at this time.

        I believe before the end of his first term he will have changed our trade policy with China dramatically…and the inflow jet it creates should pull the rest in behind it….

        • D4x

          It almost seems, at this point, the legacy media will never see POTUS as anything but a temperamental failure. Almost. I predict this week, the impatience will be about Jerusalem, because, he promised… The impatience is already fevered in Israel.

          So, did you notice the new post on dead cow, no comments? too much fracking…

          See you elsewhere for sure.

          • ——————————

            That is how they will see him no matter what he accomplishes.

            I sure hope he will not walk away from running for a second term because of all the nonsense in politics and the media. It is something I think about…he is not a politician, he will be almost 74, and he sure as hell doesn’t need the money or the prestige….

          • D4x

            With 17 political parties represented in the Knesset, and more that are not, safe to say political opinion in Israel is complicated. Israelis mostly see POTUS Trump favorably, compared to his predecessors. However, the ‘will he or won’t he’ move the Jerusalem embassy is upsetting to many.

            Can’t believe you are thinking about 2020. Let’s think about that after the big trip to KSA, Israel, Vatican, G-7, and NATO.

          • ——————————

            I’m always planning and thinking ahead.
            It’s in my nature….

  • Andrew Allison
  • Isaiah6020

    Trump needs to deliver growth. He wants to deliver growth. I want him to deliver growth. Getting your biggest adversary more dependent on you to supply their food is a strategic priority. Let’s try to think beyond the next tweet.

    • ——————————

      That’s true about the food.
      They have us sucking on their teet of cheap goods, but we will have them sucking on our teet of food, LNG, and other energy…which is better? …

    • Suzy Dixon

      I’m truly sorry to say that is not the case. They are not dependent on the United States for food. In fact, they would not even import much pork until they used a few billion of Americas trade deficit dollars to buy Smithfield Foods. Now, the Chinese Communist Party owns about 25% of all the pigs born in America, and they bought it with America’s trade deficit dollars.

      They also would not import GMO crops until they were allowed to buy Syngenta because they couldn’t compete in biotech, and stupid people in America just green-lighted it (something the CCP would never allow because it is a strategic/critical sector).

      • Andrew Allison

        Not sure that I can agree. First, while the CCP may own 25% of all the pigs born here, it’s not clear to me that the repatriation of US balance of trade dollars is a bad thing; at the end of the day, in addition to the purchase price for Smithfield, the Chinese are going to have to sell those pigs, which will repatriate even more. And, wouldn’t it be a good thing to have China become dependent upon importing US pigs?
        The Chinese strategy of requiring technology transfer in order to do business in China is an alltogether different issue. The willingness of US companies to cooperate in this is borderline treasonous but, on the other hand, stealing technology is a different kettle of fish from developing it. Replication is quite different from innovation.

        • Suzy Dixon

          The money came from an imbalance. It’s not real investment. Worse, the money is used to buy into food, pharmaceuticals, biotech, water treatment, all of the things that the CCP does not allow foreigners to own there. The purchase of Smithfield was touted as being huge at $5 billion. Well, in 2015 the US was losing about $1 billion per day to the trade deficit with China. Hard to call five days worth of trade surplus a whopping sum.

  • Anthony

    This art of the deal (potentially) leads to an agreement that eases market access for U.S. beef products, financial service producers, and natural gas exports. But, the immediate impact the deal will have on the country’s approximate $350 billion trade deficit with Beijing remains unclear. See: http://www.wsj.com/public/resources/documents/secretaryrossbriefing.pdf

  • Jacksonian_Libertarian

    America should payoff all the US Treasuries China has accumulated manipulating their currency to give their exporters a price advantage. This would immediately reverse in brutal fashion, 40 years of Chinese cheating. It’s America’s fiat currency, and we are the only ones that can legitimately benefit from it. Reminder: China has $1.3 Trillion in cheating to answer for.

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