The Incredible Shrinking U.S.-China Trade Deal

The Incredible Shrinking U.S.-China Trade Deal
President Donald Trump listens as Chinese Vice Premier Liu He speaks during a press conference at the White House, in Washington, Jan. 15, 2020 (SIPA photo by Oliver Contreras via AP Images).

Two weeks after it was signed, President Donald Trump’s phase-one trade deal with China, which the White House typically hyped as a “landmark” and “historic agreement,” is looking more suspect. There were always questions about what was left out of the deal—especially industrial subsidies in China and continued tariffs on hundreds of billions of dollars in imports from China. But now there is growing skepticism about the value of what is actually in the deal.

What happened to the $40 billion to $50 billion in additional sales that Trump promised American farmers? Can Beijing really deliver on its commitment to increase imports of goods and services from the United States by $200 billion over the next two years? And can it do so without antagonizing other trade partners and running afoul of international rules barring China from favoring U.S. exports at the expense of other countries?

A number of factors bring the viability of the agreement into question. Hitting all of its stated targets would require China to almost double its imports of products covered in the deal by the end of 2021. Moreover, because the baseline level from which the increases will be measured is 2017, and because the trade war has caused Chinese imports to drop sharply in the intervening years, the required increase from estimated 2020 levels will be closer to $240 billion, an even bigger stretch. And if Chinese economic growth, which was already decelerating, slows further because of the Wuhan coronavirus, the targets could be even harder to reach.

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