“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.”
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“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.””
“Even on the day two years ago that the trade deal was inked, there was skepticism that China would live up to its pledge to spend $200 billion more on U.S. goods and services.
But a new study finds China didn’t even spend an additional dime on U.S. products.”
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“China agreed to buy at least $227.9 billion of U.S. exports in 2020 and $274.5 billion in 2021, for a total of $502.4 billion over the pact’s two years, he noted. In reality: U.S. exports of covered goods and services to China over the two years totaled $288.8 billion.”
“Because of the warming diplomatic ties between Lithuania and Taiwan, China has unleashed a strict embargo against the Baltic nation — boycotting not only its exports but even goods from other EU countries made with Lithuanian components.
To help ease the pain for its most dogged European ally, Taiwan has announced a $200 million investment plan. And that raises the prospect of co-operation on chips.
Taiwan’s investment plans in Lithuania are not yet finalized, pending studies to be conducted by a team of Taiwanese experts within the next few months. But in an interview with POLITICO, the top Taiwanese diplomat in Vilnius said nothing was off the table, and that Lithuania could act as an inroad to the rest of the European semiconductor market.”
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““Taiwan is playing its economic cards smartly,” Mathieu Duchâtel, director of the Asia Program at the Paris-based Institut Montaigne said. “Clearly, Taiwan has something concrete to offer to strengthen the European semiconductor ecosystem, and the message is that this is linked to deepening Taiwan’s international space — so this is a form of economic statecraft.””
“President Joe Biden..signed a bill to curb forced labor in China that U.S. business groups and trade experts warn will inflict unnecessary pain on U.S. firms and punish legitimately employed Uyghur Muslims in China’s Xinjiang region.
The Uyghur Forced Labor Prevention Act, which was approved after more than a year’s delay, is designed to insulate U.S. companies and consumers from complicity in forced labor practices in Xinjiang. The U.S. government has concluded that the practices are among abusive state policies targeting Uyghurs that constitute genocide.
But industry groups and trade lawyers say the law’s strict compliance standards coupled with problematic Customs and Border Protection enforcement will harm both U.S. business interests and Uyghur Muslims.”
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““If you’re a company who is manufacturing in that area, you’re going to need to prove that slaves didn’t make it. The presumption is on you,” Rubio said after the bill’s Dec. 16 Senate passage.”
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“Assertions of the law’s stringent compliance standards are no exaggeration. It imposes a presumption of guilt in terms of forced labor links to any Xinjiang-sourced imports — predominately agricultural and chemical products — and obligates importers to provide documentation that proves its Xinjiang supply chains are not tied to forced labor.
The experience of solar and apparel companies from previous forced labor enforcement actions by Customs and Border Protection suggest that the new law’s compliance standards will be “practically impossible” to meet, said former CBP trade lawyer Richard Mojica.”
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“Mojica and other trade lawyers say the law’s compliance requirements will most seriously impact small- and medium-sized U.S. firms that lack in-house expertise to reliably map complex overseas supply chains.”
“The Uyghur Forced Labor Prevention Act effectively bans all imports from China’s Xinjiang region, where the U.S. government has said that the Chinese Communist Party is perpetrating a genocide against the religious minority, including slave labor, forced sterilizations and concentration camps. Under the terms of the bill, companies that produce goods in Xinjiang can be granted an exception if they show proof that those products are not made using forced labor.
“Many companies have already taken steps to clean up their supply chains,” Rubio said. “For those who have not done that, they’ll no longer be able to continue to make Americans — every one of us, frankly — unwitting accomplices in the atrocities, in the genocide that’s being committed by the Chinese Communist Party.””
“The Biden administration has reached a deal with the European Union to withdraw tariffs imposed by President Donald Trump on European-made steel. Unfortunately, the agreement likely won’t translate into lower costs for American manufacturers and consumers.
That’s because the Biden administration is replacing Trump’s tariffs with a new form of protectionism that will continue to artificially inflate the cost of steel imported from Europe. Instead of charging 25 percent tariffs on all steel imports, as Trump did, Biden’s deal includes a so-called “tariff-rate quota” that will allow 3.3 million metric tons of steel to be imported annually without tariffs. Once that threshold is met, the 25 percent tariffs will apply to subsequent imports. For reference, the U.S. imported nearly 5 million metric tons of steel from Europe in 2017—the last full year before Trump’s tariffs caused imports to fall sharply.”
“At the core of former President Donald Trump’s aggressive trade policies was a relatively simple—perhaps overly simplified—promise: Tariffs on Chinese-made products would drive manufacturers out of China.
“Many tariffed companies will be leaving China for Vietnam and other such countries in Asia,” Trump claimed in May 2019, about a year after his tariffs were first imposed. “China wants to make a deal so badly. Thousands of companies are leaving because of the Tariffs,” he tweeted a few months later, suggesting that the outflow was already underway. “If you want certainty, bring your plants back to America,” Robert Lighthizer, Trump’s U.S. trade representative, lightly threatened in a New York Times op-ed in May 2020, as the trade war’s second anniversary arrived.
But the tariffs failed to achieve that primary policy aim, according to a new paper published by researchers at the University of Kansas and the University of California, Irvine. Roughly 11 percent of multinational companies exited China in 2019, the first full year in which tariffs were in place—a significant increase from previous years. But the overall number of multinational firms operating in China actually increased during that same year, as foreign investment continued to flow into China even as the trade war ratcheted up costs.
In fact, the number of U.S.-based multinationals in China actually increased from 16,141 in 2017 to 16,536 in 2019. Non-U.S. companies were more likely to exit China during 2019 despite not being subjected to Trump’s tariffs.
“We estimate that less than 1 percent of the increase in U.S. firm exits during this period was due to U.S. tariffs. And U.S. firms were no more likely to divest than firms from Europe or Asia,” researchers Jiakun Jack Zhang and Samantha Vortherms wrote in The Washington Post this week.”
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“Trump is no longer running U.S. trade policy, but his failed tariffs on Chinese imports are still in force. Lighthizer’s replacement in the Biden administration, U.S. Trade Representative Katherine Tai, has said the tariffs provide “leverage” over China.
But that perspective is no more grounded in reality than Trump’s promises that his tariffs would cause companies to flee China. American consumers are bearing nearly 93 percent of the costs of the tariffs applied to Chinese goods, according to a recent report from Moody’s Investors Service. How is this giving the White House leverage over China?”
“The bureaucratic process established by the Trump administration to determine which American companies should be exempted from paying tariffs on imports from China is a black box of “inconsistencies” and poorly documented decision-making, according to a new audit.
In a report published last week, the Government Accountability Office (GAO) cast a critical eye on the so-called “tariff exclusion process” created in 2018 as part of the Trump administration’s efforts to slap tariffs on a wide range of imports from China. The process, overseen by the Office of the U.S. Trade Representative, allowed American businesses to appeal to the federal government for permission to not pay tariffs if they could demonstrate that a given product was not available from other sources, or if a business faced “severe economic harm” due to the tariffs.
Between 2018 and 2020, American businesses submitted more than 53,000 exclusion requests. The vast majority—87 percent—were denied, and most of the denials were on the grounds that the company failed to demonstrate sufficient economic harm to the Office of the U.S. Trade Representative, the GAO found.
In other words, federal bureaucrats reviewed tens of thousands of statements from companies pointing out how the Trump administration’s tariffs would cause economic harm—because, yes, Americans paid for the tariffs—then discarded most of those requests because the harms were not “severe” enough.
What’s even worse is that there’s very little in the way of objectivity or due process afforded to companies that had their exclusion requests denied. Soon after the tariffs were imposed, members of Congress warned that the exclusion process lacked “basic due process and procedural fairness” and that it could be “abused for anticompetitive purposes.” As Reason previously reported, business owners have complained that simply getting a decision one way or the other can take months. And there is no way to appeal the rulings.
The new GAO report confirms some of those concerns.”
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“tariffs are always about protecting certain industries, and protecting certain industries always invites influence-peddling.”