Trump’s Trade Deal With China Was an Abject Failure, Just Like the Trade War

“The so-called “phase one” trade deal inked in December 2019 by former President Donald Trump and Chinese President Xi Jinping might have put an end to the spiraling trade war between the two countries, but the agreement did not result in China buying more American goods, as both leaders promised it would. In fact, during the two years covered by the deal, China imported fewer American goods than before the trade war began—meaning that the deal did not even succeed at patching up the damage caused by Trump’s bellicose trade policies.”

“We now know that the promised benefits did not materialize. But the costs certainly keep adding up. Auto manufacturers, for example, shifted supply chains to avoid the cost of tariffs and economic uncertainty created by the trade war—by relocating some American manufacturing jobs to China, which has become a large and growing market for auto sales. BMW, for example, shifted much of the production of its X3 sport-utility vehicle from Spartanburg, South Carolina, to China after reporting that tariffs had cut the company’s American profits by about $338 million in 2018. The higher costs imposed by the trade war caused Tesla to announce that it was “accelerating construction” of a new plant in Shanghai.

Overall, Bown estimates, exports to China would have been $26 billion higher in 2020 and $39 billion higher in 2021 if not for the impact of the trade war and subsequent trade deal. That doesn’t account for other losses sustained during the trade war, like the increased farm subsidies paid for by American taxpayers and the run-of-the-mill cost increases created by tariffs.

Aside from some positive developments with regard to China’s treatment of intellectual property and financial services, probably the only good thing about Trump’s “phase one” trade deal is that it has now expired.

“President Trump’s trade war and phase one agreement did little to change China’s economic policymaking,” Bown concludes. “Beijing seems intent on becoming more state-centered and less market oriented.””

https://reason.com/2022/02/09/trumps-phase-one-trade-deal-with-china-was-a-total-failure-just-like-the-trade-war/

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