AP Photo/Evan Vucci
- President Donald Trump hailed the easing of trade tensions with China as the “biggest deal there is anywhere in the world.”
- But it failed to address some of economic issues at the heart of the bitter dispute, raising questions about whether it was worth nearly two years of bruising tariffs.Â
- Even administration officials have at times offered a less ambitious assessment of the phase-one deal than the president.
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President Donald Trump hailed the easing of trade tensions with China as the “biggest deal there is anywhere in the world.” But it failed to address some of economic issues at the heart of the bitter dispute, raising questions about whether it was worth nearly two years of bruising tariffs.Â
“The phase one deal looks a lot like the status quo ante with higher taxes on US firms amidst a lot of vague promises,” said Joseph Brusuelas, the chief economist at RSM, a financial consulting firm.Â
In the 94-page text of the phase-one agreement released following a signing ceremony Wednesday, there were several concessions from China that the White House could tout ahead of the election in November. Those included stronger protections for patents and intellectual property, a pledge to increase purchases of American products by $200 billion, and more room for foreign companies to gain access to the financial sector in the state-run economy.Â
“This is far more comprehensive than anyone ever knew about in the press,” Trump told reporters in the State Dining Room following the ceremony, according to a pool report. “Nobody knew the deal until today when we released it. It’s a bigger deal than people thought. It’s a tremendous step toward an unbelievable relationship, so really it’s the best it’s ever been.”
Yet commitments on industrial subsidies and other structural issues the Trump administration has long promised to address were conspicuously absent from the phase-one agreement. The tit-for-tat tariff fight began in early 2017 after a Section 301 investigation found that China was guilty of economic aggression.
“I supported the President taking tough action on China. I was rooting for him to succeed,” said Senator Chuck Schumer, the minority leader and an outspoken China critic. “But this so-called ‘deal’ does next to nothing of substance. I greatly fear that President Xi is laughing at us behind our backs for having given away so little at the expense of American workers, farmers, and businesses.”
Even administration officials have at times offered a less ambitious assessment of the phase-one deal than the president, noting that it was never meant to be comprehensive and pointing to a fresh round of negotiations that is expected to take place soon.Â
“Is it going to solve all the problems? No,” US Trade Representative Robert Lighthizer told CBS in December. “Did we expect it to? No. Absolutely not. It really is a remarkable agreement, but it’s not going to solve all the problems.”
Punitive tariffs were also kept on more than $360 billion worth of Chinese products to ensure compliance, albeit some at a lower rate than before. Still, the phase-one agreement was the first tangible sign of progress in the 21-month standoff.Â
“I call it a truce with extended purchases,” said Mary Lovely, a trade scholar at the Peterson Institute for International Economics. “The purchases seem to be more flexible and perhaps the numbers are a little lower than we were led to believe. I think that’s probably good because the numbers have been very aggressive. They might actually be met and not be a source of conflict.”