Free Trade

U.S., China Agree to 'Phase One' Trade Deal, but Most Tariffs Will Remain in Effect

This deal offers minimal relief for Americans, and it doesn't seem to address the thorniest issues between the two countries.


The White House announced today that it has struck a trade deal with China. If you think that means the United States has won the trade war, Ron Vara has $50 billion in soybeans to sell you.

Vara, of course, is not a real person. He's the fictional stock broker, military vet, and Harvard alum who is presented as an expert on China in a series of books written by Peter Navarro, one of President Donald Trump's top trade advisers. The fact that one of the president's advisers invented a fake expert would be a big deal in a normal times, but these days we are so far past normal that the White House circulated a memo written by "Ron Vara" to members of Congress this week, urging them to support more tariffs on Chinese imports.

So when that same White House says it has struck a trade deal with China, a little skepticism is probably in order.

That's not to suggest that the announcement is bad news. The Office of the U.S. Trade Representative said today that a new round of 15 percent tariffs scheduled to take effect on Sunday will be canceled. The U.S. will also reduce some existing tariffs. Specifically, the 15 percent tariffs imposed on some Chinese imports in September will be cut to 7.5 percent. The 25 percent tariffs on about $250 billion of Chinese imports (about half of all goods imported from China) will remain in place.

In a statement, U.S. Trade Representative Robert Lighthizer said the "Phase One" deal "achieves meaningful, fully-enforceable structural changes and begins re-balancing the U.S.-China trade relationship." The deal includes what Lighthizer calls "a strong dispute resolution system" for intellectual property issues, and it is supposed to set the stage for a more detailed trade deal to be worked out next year.

All of that sounds pretty good. As I wrote on Monday, there is little reason for Trump to go through with the planned tariff increase—a new 15 percent import tax on consumer electronics, toys, and various other items. That would make it more difficult to strike a deal, and it would overwhelmingly harm American businesses and consumers rather than China. Backing off from those threats and agreeing to scale back some other tariffs is exactly the kind of concession the U.S. should be willing to make in a trade negotiation.

And yet this deal offers minimal relief for Americans, who after all are paying the cost of the tariffs. The 25 percent tariffs, imposed mostly on industrial goods and raw materials, will continue to hammer American manufacturers and small businesses.

One major question mark is China's supposed promise to purchase $50 billion in American agricultural goods—a promise that Fox News' Edward Lawrence reports "will not be in writing." The Office of the U.S. Trade Representative is refusing to say exactly how much China has agreed to buy.

Because why spend months negotiating a trade deal and then not put crucial details in writing, right?

But even if China has agreed to do exactly that—and here we will pause for a moment to note that Chinese officials have been careful to avoid committing to those targets—the numbers can't possibly be accurate.

As Karen Braun, an agriculture and trade columnist for Reuters, details in a series of tweets, it's difficult to imagine China purchasing $50 billion in American agricultural goods in a single year. The record value for all American farm exports to China in a single year is about $26 billion, set in 2012. If you include fish and forestry products, that record total rises to $29 billion.

In fact, China could buy all American exports of corn, soybeans, wheat, and pork—meaning that American farms would not sell any of those goods to residents of any other country in the world—and you'd only barely exceed $50 billion a year.

When can we expect to see the details of the deal that was supposedly inked on Thursday? Don't hold your breath. Lawrence reports that China has "requested that the language of the [deal] never be made public" and that Phase Two of the deal won't be negotiated until after the 2020 election.

That's mighty convenient, isn't it? Trump will get to spend the next several months claiming he successfully stood up to China and won the trade war, by getting the Chinese to agree to a deal that no one else is allowed to see.

Think of it as Ron Vara's Canadian girlfriend.

All this might be clever politics, but it's certainly not a full-fledged trade deal—which must be approved by Congress, and therefore must be both written down and made public—or proof that Trump's trade war has been a success.

This Phase One agreement seems to be, at best, a face-saving way to back off from imposing costly new tariffs, and a way to punt the thorniest parts of the China trade dispute until after the next election. It comes with only modest tariff relief for U.S. consumers, doesn't undo the worst losses of the trade war, and contains likely overblown promises about China's ability to buy more American farm goods. But don't be surprised if Trump acts like it's a major victory.

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    1. The only thing imploding is Jeff Bezos’ net worth. Did you know he’s lost $15 billion this year? That’s Drumpf’s fault.

      1. Hey now, lets at least leave Jeff Bezo’s alone until The Expanse gets cancelled ok?

        It airs tonight, and I’m looking forward to it god damn it.

      2. Maybe Jeff shouldn’t have expected his whole income to come from shady trade deals with China.

        But it’s also Funny that I always use Amazon to shop for U.S. goods.. Seems like upon that premise “foreign” tariffs would have absolutly no effect.

    2. “The 25 percent tariffs, imposed mostly on industrial goods and raw materials, will continue to hammer American manufacturers and small businesses.”

      Noticeably absent from this article… inflation data. Again. Still no signal. But this must have occurred.

    3. When the day is long
      And the night, the night is yours alone
      When you’re sure you’ve had enough
      Of this life, well hang on

      Don’t let yourself go
      ‘Cause everybody cries
      And everybody hurts sometimes

  2. “So when that same White House says it has struck a trade deal with China, a little skepticism is probably in order.”


    1. “That’s not to suggest that the announcement is bad news.”

      We can see that dumbass, it’s suggesting they’re lying you fucking retard lololololl


      Get your grade-school babble correct, vile troll!

      All smart grade-schoolers KNOW that it should actually be
      AAHaeAHAHuioAHAHAaaeuuiAHAHAH, eeee-ah-ah, walla-walla-bing-bang, sung by a ding-a-dong!

        1. Go ahead and make a better one. We’re all waiting to be amused!

          1. “SQRLSY One”

          2. “Go ahead and make a better one…”

            SQRLSY One claims to be an adult.

            1. Sevo and Tulpa,
              Sitting in a tree,

              …and then F-U-C-K-I-N-G! (Ewwww!!!)

  3. Poor Boehm.


  4. Maybe we can place tariffs on all that fucking salt …

  5. Only $50 Billion? Why not get them to buy… $50… Million?

  6. “for intellectual property issues”

    Reason does not address this issue .
    If It is actually a right and violated by China, the the U.S. would have the right to self-defense in some form that might legitimize actions against China.
    However, I see Reason as opposing that view in which case it must now denounce intellectual property rights as a false concept which it it has not done either.

    1. Whatever has been worked out on intellectual property is the most interesting part of this deal. It would be nice to know details.

      I don’t see any other news stories that corroborate Edward Lawrence’s claim that the Chinese don’t want the language of the deal made public. (I have no idea who Edward Lawrence is, but his Twitter bio says he is a “Space Force Recruit”. Ha ha.)

      1. Actually, the really interesting issue they’re addressing is U.S. investors’ access to Chinese financial markets. That’s been a closed market forever and we’ve been trying to knock down that barrier since Clinton. It’s been indicated that will be addressed in these negotiations.

        1. That’ll be interesting, assuming Americans start holding major investments in Chinese enterprises.

          1. Your carts pulls the horse attitude demonstrates your total lack of knowledge about how investing affects corporate behavior.

    2. Heres what you dont understand… only american behavior is bad. Even if america is responding to market manipulation or theft they have no allowable recourse than just to eat the costs. Any punitive measures for a response is a tax while the billions on costs on IP thefts are not. Forget the fact that the vast majority of economists now accept modern game theory as essential to economics, we are not allowed to utilize responses such as tit for tat to dissuade future negative market actions by other nations.

      1. Maybe the state shouldn’t be making vast economic decisions on behalf of the citizens in the first place.

        1. Maybe. Meanwhile back in the real world…

        2. Other states like china already are dummy.

          It is weird how you claim to be pro liberty. Does liberty to you mean allowing theft and resale in a market? Because that is what you’re actually arguing for. IP theft is an actual cost to consumers and lowers further investment in IP.

          Would you argue it is just fine for the mob to rob a television store and resell the goods below market price without any legal consequences because the state shouldn’t get involved?

          You’re back to sophistry I see.

          1. Look, Free Trade™ means that even if your trading partner is literally stealing from you you’re obviously better off without question. There can be no recourse because it infringes on Free Trade™.

            This is apparently what some people actually believe.

            Nevermind that the American economy relies on intellectual property and innovation. Why spend time and effort developing technology when you can just take it and then turn around and sell that technology to your own markets?

            Bonus points if you can get the company that owns the patents to build the manufacturing plants in your country for you too.

            China might be able to make your flat screen TV cheaper, but you’re changing employment in the U.S. while you do it. In fairness it’s possible it won’t reduce employment, but it quite certainly changes what that employment looks like.

            Perhaps, for example, there won’t be many jobs for low-skilled American labor at a reasonable price point. I suppose we’ll just need more Hard Working Immigrants™ working under the table to offset that problem…

        3. Chiming in with absurdist scenarios is why people make fun of you specifically.

          “Imagine there’s no countries ….”

          It’s a nice notion, but it’s retarded.

          1. Someone’s been listening to far too much John Lennon. I guess we’ll need to throw religion and private property under the bus too. He told us that’s how you get to living for today and the world being as one, right?

            Brotherhood of man, indeed…

    3. Intellectual property issues? China should be suing the entire western world for having stolen the IP for wheelbarrows, clocks, gunpower, rockets, guns, silk, compasses, and more!

      1. You sadly probably believe this.

      2. And spaghetti without which we would never have had the mafia, the Teamsters or Bobby Kennedy.

      3. Fighting over yesterday’s IP is for losers… For those who want to sit on their butts and bask in yesterday’s triumphs. The cutting edge is where it’s at! Notice that NO ONE has yet stolen Space X’s IP for re-landing and recycling rocket booster stages! If you value your IP, hold on tight to it! And if you want to trade it for the services of 10,000 overseas laborers, it is YOUR IP; not Emperor Trump’s IP, or the property of the Collective American Hive! If you want to piss and moan that Boeing or Ford have sold their seed corn for the services of 10,000 overseas laborers… Then GET OFF OF YOUR LAZY ASS and assemble and offer the services of those kinds of numbers and skills of workers, at the right price, WITHOUT asking for the IP, and I am sure that Boeing or Ford will be interested!

        1. You probably stupidly believe they have never stolen tech IP from US corporations. Their entire aerospace sector is dependent on stolen tech, much of it funded with tax payer dollars.

          1. SQRLSY One
            December.12.2019 at 6:06 pm
            “Is anyone with knowledge of the operation alleging ICE promised an actuall education…”

            Please get yourself an ACTUAL education on how to use simple spell-check that’s even embedded into the posting software right here! OK, I am a grammar (and spelling) NAZI, so be it… When you are lazy about these things, readers will assume that you are ALSO lazy about BASIC THINKING about what is right and what is wrong! ICE is lying out their ass in order to trap and punish people! Real human beings are the victim here! You want this done to YOU? If not, don’t support it! And ICE is NOT using their LYING to prevent murder or mayhem either!

            Hints about single v/s double v/s triple “L” use:

            The one-L lama, he’s a beast,
            The two-LL llama, he’s a priest,

            The 3-LLL lllama, he’s deceased!

            (“Deceased” roughly = non-existent).




            1. I notice that you only address the trivial reversal-error that I made, and you do NOT address the substantial issues!

              Did you assholes ever hear of “straining at the gnat and swallowing the camel”?

              People like “the Rev” (Art What’s-His-Face) and I call you conservatives and fake libertarians on it all the time… Your (many of your) total lack of ethics and morality. Trump-worshippers excuse His every fault and mis-deed. As one of his defenders said, Trump could murder a victim in broad daylight (in front of TV cameras), and y’all would deny the facts and defend Trump. Trump-Tribe Uber Alles, Tribe Above All… Certainly above ethics and morality. Y’all want to pat yourselves on the back, over the fact that at least you’re not lowly illegal sub-humans. Meanwhile you cheer for Trump while He (Emperor He) excuses war criminals, scapegoats illegal sub-humans, and throws babies in wire cages. Shame on you!

              I have repeatedly asked, from WHERE do you get your ethics? WHO told you that illegal sub-humans are lowly life forms, and that you are exalted? God? Evolution? The cosmos? Karma? Democracy? Keep in mind that our “democracy” has blessed slavery, Jim Crow, no votes for women, concentration camps for Japanese-Americans, and on and on…

              I know how to treat others the way that I would like to be treated. It’s that simple. “Others” includes those that evil people like to call illegal sub-humans, and so forth. If “others to be treated as we like to be treated”, in your “ethics”, does NOT include those born on the wrong side of the railroad tracks (river, mountains, invisible lines in the sand, yada-yada), then WHERE did you get your so-called “ethics”? I NEVER get an answer.


              No, y’all don’t want to talk about it. You’d rather split hairs about me momentarily reversing the facts in a little ditty, than to look (even briefly) in the mirror, and see your own EVIL staring you in the face! Strain at the gnat and swallow the camel some more, assholes! Then laugh about it!

              1. You’re too ugly to be a camel.

              2. Nobody takes anything you say seriously. Now run along and play in traffic.

                1. Yes, surprise, surprise, like I said, evil people do NOT like to look in the mirror! And still I have NO answer to WHERE the haters of so-called illegal sub-humans get their so-called “ethics”!

                  More news at 11:00!

                  1. Incoherent ramblings.

                    News at 11.

          2. I want to preemptively apologize to Jeff for using a right wing source.

          3. So the USA aerospace sector has failed to hold on tight to their IP (unlike Space X?). Only a ferriner (non-USA subhuman) like Elon Musk is competent enough to guard his / their IP? Sounds like it’s high time to bring in more immigrants then!

            But my major point is this: Taxing-tariffing the USA public, and ALL USA businesses, punishing us ALL, just for the sins of the aerospace sector, is some VERY crude and stupid “justice”!

            1. Space x is usa aerospace dumbfuck.

              1. Learn to read, moron!

                From my earlier comment only slightly above…

                “Notice that NO ONE has yet stolen Space X’s IP for re-landing and recycling rocket booster stages! If you value your IP, hold on tight to it!”

                Like Space-X has been doing! As led by what conservatard assholes like to look down upon, as a non-American subhuman immigrant like = to Elon Musk!

                1. He read it correctly. You just can’t write coherently. Probably because of your incoherent thought process.

                  1. Yes, you are exactly correct, when all things are to be read as, “if it says Trump-Tribe GOOD”, then it is to be understood as CORRECT! And “if it says Trump-Tribe BAD”, or “Immigrants are human beings, whether legal or illegal”, then it is to be understood as INCORRECT or PISS-POORLY WRITTEN!

                    This is how the Trump-Tribal mind works… Other tribal minds work similarly, but with different axes to grind. So it has been written, so it is being done. I just hope that the scripts change for the better, one of these centuries…

                2. Hey dumbfuck

                  So the USA aerospace sector has failed to hold on tight to their IP (unlike Space X?).

                  Your words. You separate the US aerospace from space x despite space x being part of it.

                  You’re not intelligent no matter how much you think you are.

                  1. JesseAz is a mammal. Mammals generally shit in public, spewing their poop all over the place. They generally NEVER clean their poop up, either!

                    JesseAz is a mammal (not separate from the group known as mammals). Treating JesseAz differently, then, makes no sense!

                    Hey, you health hazard public-shitting asshole, WEAR A DIAPER, stupid, inconsiderate jerk!

        2. “If you want to piss and moan that Boeing or Ford have sold their seed corn for the services of 10,000 overseas laborers…”

          I just want to point out that forced technology transfers aren’t about getting cheap laborers. It’s about being able to sell inside China.

          You want to sell your cars in China? That makes sense, we have more rich people in China than there is a middle class in the U.S.

          Well, we’re here to help. All we need you to do is set up a joint partnership with . . . you don’t even have to find a company yourself–we’ve already picked one out for you! Anyway, you set up a joint partnership with Red Tiger Corp, really nice people, used to be part of the Communist Party Leadership, and you’ll be the minority partners. Once you transfer all of your patents to the new joint partnership, we’ll set you up with a manufacturer, and you’ll be on your way to selling all the products in China you want!

          Isn’t that great!

          It isn’t about hiring cheap employees.

          They won’t let you sell your nifty new product in China unless you transfer all the intellectual property behind it to a joint venture with you as the minority partner and the majority partners being a former member of the Chinese Communist Party or a former member of the People’s Liberation Army. You may not be able to export your products into China unless you agree to those terms. It’s a major market barrier, and anyone who believes in free trade or international trade should vehemently oppose it.

          1. Thanks Ken! As usual, your comments are thoughtful and informative. I hadn’t really thought about that and-or been aware of it. But it does make sense to me…

            Thanks for the counter-point!

            1. I for one am shocked that sqrsly was ignorant. – nobody ever.

              1. Yes, I am capable of changing my mind, admitting error, and admitting ignorance… Unlike SOME people that I know!

          2. Just for the record . . .

            “China has some unique economic bureaucratic features that facilitate the enforcement of the practice. For one, foreign direct investment in China is still partially closed. This means that, in order to operate in certain industries in China, foreign companies must operate through joint ventures. The joint ventures partner with multinational and local companies, not allowing the multinational firms to hold a controlling stake in the partnership. These partnerships can force foreign companies to share their sensitive, private technology with local, domestic firms – firms they may end up competing with in the free market, later on.

            State owned businesses play a significant role in forced technology transfers, too. In China, the Communist Party appoints top executives to companies in high tech sectors like transportation, air travel and telecommunications. The executives in these industries could be incentivized not just by profitability, but by the health and future of the sector in China. This can lead to deal-specific stipulations, which can include transfer of technology as a precondition for access to Chinese markets.”


            Personally, I don’t believe this was worth going all trade war over it and the cost of the tariffs. Why should U.S. consumers pay more for imports–just to benefit exporters to China? I’m not here for your benefit!

            That being said, if Trump managed to get rid of the practice, it’s a very good thing. If he really managed to get rid of the practice, then he broke down a significant trade barrier.

            1. Someday, the Chinese economy will mature and they will enter into a recession. With great opportunities for investment come great opportunities for malinvestment, and recessions are the way those malinvestments are wound down. When the first recession comes to China, I don’t know what will happen, but it wouldn’t surprise me if it’s a revolution. The whole country may go like Hong Kong.

      4. Are you seriously so retarded that you believe that patents and intellectual property would extend for several thousand years?

        Cool story. That said, Disney agree’s with you.

  7. But…..but….Boehm….tariffs never work!

    1. It’s kinda early to conclude that tariffs are working. We don’t know the actual terms of this deal.

      And a whole lot of tariffs are still in effect, presumably because they have not yet reached whatever goals they are there in service of.

      1. You lost.

  8. “Most Tariffs Will Remain in Effect”

    IOW the #DrumpfRecession will continue. Charles Koch’s net worth will remain stagnant in the $58,000,000,000 to $62,000,000,000 range. A low unemployment rate will simply mean everyone needs 2 or 3 jobs to survive.



  9. “One major question mark is China’s supposed promise to purchase $50 billion in American agricultural goods—a promise that Fox News’ Edward Lawrence reports “will not be in writing.”

    Boehm is writing about this before he–or anyone else–has seen the exact terms of the agreement, but even this should be known: the outline of the agreement contains a “snapback” provision. Should China at some point in the future fail to abide by the terms of the agreement, especially in regards to intellectual property and forced technology transfers, the tariffs snap back in place.

    Meanwhile, the second part of the agreement, which would eliminate the rest of the tariffs Trump has imposed, is contingent on China abiding by the first part of the agreement. If China doesn’t make the soybean purchases in question, the penalty isn’t a mystery to anybody but Boehm. The penalty is that there won’t be a second phase of the agreement to eliminate the rest of the tariffs, and the old tariffs will snap back into place.

    Trump gets it both ways with the agreement structured this way. He can go into the election with the ability to brag to voters in rust belt swing states that he won concessions from China as promised. On the other hand, it’s hard to criticize him for capitulating to China, when he’s still in negotiations–and still has large amounts of tariffs in place.

    I would prefer Trump dropped all of the tariffs unilaterally, but I don’t see any reason to be dishonest about what Trump has accomplished or what we do know about this deal.

    The fact is that Trump has won major concessions from China, the the prospect of negotiating away the remaining tariffs and the fear of bringing back the old tariffs is the means by which Trump is guaranteeing that China will abide by the terms of the agreement, whatever the specifics, and if China has committed to subject itself to this leverage with a promise to buy soybeans over a period of more than one year, that doesn’t suggest the agreement to buy soybeans isn’t real. It suggests that China sees this phase one agreement as a down payment on phase two–and that they’re taking this agreement seriously.

    1. Ken, far be it from me to disparage your expertise in this field but “snapback provisions” are not self-executing. They’re more like a red line drawn in the sand. At the risk of being dishonest about what Trump has accomplished, I’d say he’s accomplished the feat of claiming he’s drawn a red line in the sand. I’m not sure what major concessions you’re talking about Trump winning from China since – like Boehm – you haven’t seen the details of the deal, either and any talk of anything Trump’s done or said or thinking or planning is highly speculative since everybody on all sides are so thoroughly full of shit.

      1. “snapback provisions” are not self-executing. They’re more like a red line drawn in the sand. At the risk of being dishonest about what Trump has accomplished, I’d say he’s accomplished the feat of claiming he’s drawn a red line in the sand.

        I don’t see anything to disagree with there. Incidentally, written agreements are likewise only enforced when the aggrieved party decides to trigger whatever remedies are spelled out in the agreement. If the agreement falls apart, then the agreement falls apart.

        But I’m not the one pointing out that the soybean purchases aren’t in writing. I’m just pointing out that the snapback provision was being touted since days ago–and I’ve been writing about it here in comments for quite some time. Here’s a citation from before the agreement was announced yesterday:

        “Washington has insisted that Beijing purchase greater quantities of agricultural and other products, and negotiators have sought better protection for U.S. intellectual property rights and wider access to China’s financial services sector. A clause known as a “snapback” provision would put back in place the tariff rates if China fails to deliver on those promises.

        Plenty of Trump’s critics seem to be selling this as if Trump sold the farm in exchange for some magic beans.

        That is not the case.

        All international agreements are involve state actors who want to avoid the negative consequences of not abiding by the agreement. We can’t call the intergalactic police to throw China in jail if they don’t abide by the terms of the agreement. We just cite the offense and invoke the remedy in the agreement.

        Countries generally abide by these trade agreements, especially when doing so is of benefit to their economy. Point being, China made these concessions, there are enforcement mechanisms in place, and they’ve been widely advertised over the past week in the run up to expectations about the deadline on December 15th.

        Remember last week, when we were having arguments about whether the Chinese were susceptible to pressure at all? That was incredibly childish. I was arguing that if they want to avoid the pain of new tariffs on December 15th, then having those tariffs in place as a threat made it more likely they would come to an agreement–and before that date. I remember writing something to the effect that I would take the “under” on that bet, meaning that it would probably happen before December 15.

        China only made these concessions reluctantly–under pressure–because they expect to abide by them as a worst case scenario. It’s easy to affirm an agreement when you have no intention of abiding by it. I suppose that’s another reason why we should take the agreement seriously. We don’t know what the future holds, but if Trump gets us out of this mess, it’ll be a good thing. If China stops forced technology transfers, that’ll be a good thing. If we’re against trade barriers, we should be against forced technology transfers–because they’re a trade barrier.

        1. Thanks for knowing more on the subject than me. Inflation has not risen. If China tariffs were costing America what the alarmists say that would rise. MSNBC and other wholes untrustworthy news outlets have been riding ISM Purchasing Managers Index (PMI) tanking, but in the same study article referenced has to put in the important fact that it has been suggested the PMI has been affected by the GM Strike. Which has plunged the statistics down. Critics waiting in the wings.

          I wish Reason would play it fair. Trump has sure shaken up the parties. Libertarians were talking about issues during Bush and Obama that made sense, now with Reason as the lead it seems to part of the of the Koch and globalist plan and is now more about attacking Trump and carping at each development. Ron Paul had many pertinent points that would elicit “Yeah he’s right”
          however the Libertarians were barely tolerably when you hear the whole story. Now in readings I find them suicidal with Trump living in their heads. Deficits are roaring and both parties are on the spending spree of their lives, and not a peep a to address congress, just carping critic focus on Trump. I think I am done with them no sensibly or honest info forthcoming.

          They promoted and held Adam Smith writings, yet ignore that all Trump is doing is what Adam Smith stated was valid reasons for Tariffs. Sad a one thought viable third party disappearing in the mist of powerful special interests.

          1. “Inflation has not risen. If China tariffs were costing America what the alarmists say that would rise.”

            Markets are just people making choices. To whatever extent tariffs have forced them to make other choices than they would have without the tariffs, there is a cost associated with that. They would have bought for less from China but they had to pay more instead. The standard against which that cost should be calculated isn’t a measure like PMI or CPI, it’s what consumers would have paid for those items without the tariffs and it’s all the items they decided they couldn’t afford because the costs were too high.

            That difference is important because unlocking it is the source of two important things: 1) Increases in economic growth and 2) Increases in the standard of living. Economic growth and increases in the standard of living are about consumers being able to buy the same things they were buying before for less money–and using those savings to buy other or better things that they couldn’t afford to buy before. Whether it’s in the form of tariffs or being forced to buy more expensive domestic products, we’re eating that seed corn when we hit the consumers with tariffs and force them to either make more expensive choices or go without.

            So, just because we’re not doing it to the extent that it’s actually caused large amounts of inflation yet doesn’t mean it isn’t having a negative impact. We should also note that these smaller inefficiencies, things that are bad but not yet bad enough to cause big distortions in inflation, add up over time and make the economy less resilient. A good example of this is the former Soviet Union, where they protected their domestic industries from foreign competition for so long, the only thing those industries can do that is of value on the international market now is dig commodities out of the ground.

            Our recessions become more shallow and our growth more robust when our industries are based on more than just artificial barriers like tariffs, and so long as we are forcing consumers to buy from domestic producers with tariffs or go without, we are eating away at the foundation of our economy for that reason.

            Meanwhile, because shooting ourselves in the foot hasn’t caused too much inflation yet isn’t a good reason to keep shooting ourselves in the foot. If you only stop doing things to hurt the economy once inflation kicks up or a recession starts, then you’re waiting too long. By then, it’s too late.

            1. “The standard against which that cost should be calculated isn’t a measure like PMI or CPI, it’s what consumers would have paid for those items without the tariffs and it’s all the items they decided they couldn’t afford because the costs were too high.”

              You’re making a few unfounded assumptions here.

              Not all market shifts have a cost, on fact some are beneficial. Often times a purchaser gets locked into a carrier and they never venture out again to see if they can get better rates. See insurance capture. Many supply chains have this same effect. You can not assume a market shift adds costs.

              Second you assume a tariff is direct passed to consumer, but that is not always the case. Given a market good with a profit greater than the tariff, the supplier in china could eat the cost. What we have seen is no inflation based on tariffs which means the chinese supplier appears to be eating the cost. That doesnt mean they would have lowered their prices in absence of the tariff. It is a bad assumption to make.

              1. If a consumer would have bought it but didn’t because the tariff made it too expensive, that’s a cost.

                If a consumer bought it despite the higher price, that’s also a cost.

                Because of the tariff, there is no situation in which transactions occur in which there was no cost, and then you have to add in the cost of all things people didn’t buy because of the higher price.

                There is no escaping any of that.

            2. Granted. There is a lot of native truth in free trade arguments, but Klugman and others portray it as divine will, and have called Trump ever derogative name from imbecile to devil incarnate.

              In doing so there seems to be an ignorance of the danger of not doing anything at all. These same economists usually apt for declarations of censures, and acts of warmongering to improve trade relations. Isn’t a tariffs a tool in economical growth?

              There are a few interesting factors that are anomalies in recent economic interactions. One is the international tariffs on Russia imposed by foreign nations, first touted as crushing, and had screams of denying Russians essentials, but Russians held, accepted them and adapted. What occurred was a resurgence in agriculture industries, from cheese making to herd utilization. Since the tariffs were political punishments and part of the hoax to justify another outside government coup by IMF among others these resulted in no relations, or attempts to change attitudes. After a number of years that rebirth of industries in Russia, decimated by Social/commie experiments have achieved full consumption in Russia and are now exporting excess. Exactly as Adam Smith claimed to be best for a strong nation. These tariffs were against Russia, but rather than be victims they used it for rebirth.

              Second is the implementation of Steel Tariffs prices have not increased and in fact has again achieved nominal prices they held before, but now we have a industry resurgence in America. I sure others can come up with some vague statistic that shows mass danger but overall these attacks on it have fell flat.

              The third is that except some coal productions in Pennsylvania and some other locations, the coal regulation reductions had no affect the steep decline in the coal production, with one the largest deciding to shuttle.

              These three show the reactions to tariffs, suppressive regulations or isolation is not always the assumed new theory outcome, and largely depends on whether the victims remain victims or the populations decide to bring their own creativity to bear. The only time is when certain natural needed resources are only available in one place. Yet as seen with Bolivia with new mines coming for scare electronic and battery applications (nothing is only in one place) and you just need to look, and in the US case to Topple another regime to crush others trade relations to get access.

              1. “In doing so there seems to be an ignorance of the danger of not doing anything at all.”

                I hope you appreciate that the burden of “doing something” is borne by consumers.

                I’m willing to concede that there may be good things that come out of this trade war, but consumers made sacrifices for those things. It is still unclear that the benefits Trump has won are worth the cost of the sacrifice of winning them.

                And while we’re not talking about divine will when we’re talking about market forces, we are talking about the will of individuals and the accumulations of their individual choices. Markets and market forces are the accumulation of individual people making choices. If you want to sacrifice some of your money to buy American made products, you should be free to do that. You shouldn’t be free to force other people to sacrifice their own standard of living for your qualitative preferences–any more than environmentalists should be allowed to force you to sacrifice your standard of living to save the polar bears.

                One of the problems with representative democracy is that it’s insufficiently democratic–especially when it’s compared to individuals representing themselves in a market. Some people pay more for a hybrid version of a car up front than driving a hybrid will save them in gas. The reason they do that is because they care more about the polar bears than they do about their money. The reason some people want to force the rest of us to buy electric cars is because the rest of us aren’t willing to make the same choices that they do when they make sacrifices for the polar bears. That’s where they go wrong.

                When I buy a gallon of milk at the grocery store, it’s because I care more about the milk than I do about that specific amount of money. We all have a PhD in our own qualitative preferences. Who can claim to know more about how much I value a gallon of milk–better than I do?

                Some people claim that using tariffs to protect American workers from foreign competition is more important than my standard of living. They have a qualitative preference that is similar to that of the people who want to force me to sacrifice my quality of life for the polar bears. The legitimate purpose of government is not to force the rest of us to make sacrifices for the qualitative preferences of other people. The legitimate purpose of government is protect our right to make choices for ourselves. We have police to protect that right from criminals. We have courts to protect that right from the police. We have a military to protect that right from foreign threats. The last thing the government needs to do is violate our right to make choices for ourselves and what we care about using tariffs.

                I wish people cared more about the same things that I do, but if they don’t, using the government to force them to make sacrifices for my qualitative preferences is wrong. There is no clearer voice of the American people than the choices you see them make in a market. Maybe they should care so much about their fellow Americans’ jobs that they should be willing to pay more and do without something else just for the benefit to American workers. Maybe American consumers should care so much about the way Muslims in Xingjiang are being treated in reeducation camps, that they should refuse to shop at Walmart and buy American made products instead. Maybe Americans should care so much about the protesters in Hong Kong that they should avoid buying products manufactured in China.

                Regardless of what they should do, we know they care more about their own standard of living than they do about those other things every time they buy something that was manufactured in China. And anyone who claims to know what the American people care about–more than American consumers know what they care about–is crazy. Markets aren’t divine, and market forces aren’t the voice of God. Market forces, however, are the true, authentic voice of the American people.

                Capitalism is people making choices for themselves in markets.

                Socialism is elitists putting restrictions on markets because they think their qualitative preferences are better than those of the American people and because they think they know what’s better for the American people than the American people know for themselves.

    2. Nonsense on stilts. Investor’s Business Daily had what I think is the best take – given the total lack of actual information and commitments here.

      The big picture is that Trump has concluded there’s nothing to be gained by pursuing the China trade war during an election year. He’s ready to de-escalate the conflict and cut tariffs, though it’s unclear how Beijing will reciprocate.

      Trump gets to brag about ‘a deal’ which for his base is the only thing that matters since they hardly care about details. He gets to avoid tweeting any negative shit and escalation bombast – which is the only thing that matters to markets and he doesn’t want that sort of downside shock to roil an election year narrative.

      And China gets a year of quiet to do what they want to do anyway – which is separate themselves from any tech dependence – while American companies are now in a bit of a bind as to whether they separate themselves from dependence on the China supply chain. Both of which hugely benefit China.

      And the emphasis on wheat and corn is significant. China’s total wheat and corn imports have always been close to irrelevant. And this year the armyworm has invaded. But in the US, the stocks are high and price is very very low cuz farmers all made the switch from soybeans. So China is likely to buy what they would’ve bought anyway – but from the US instead of Kazakh or Russia or Oz – and they’ll tell their farmers ‘don’t grow as much corn/wheat this year’ and they’ll be able to get rid of that armyworm a bit easier.

      1. You’re calling nonsense on stilts on provisions you haven’t even seen?

        You seem to be talking about what you want to be the case rather than any information per se.

        I wish Trump were unilaterally and unconditionally pulling down those tariffs. He isn’t doing that because he things there is something to gain in the Midwestern swing states in the rust belt by fighting for more concessions from China to get rid of the remaining tariffs. I wouldn’t expect phase two before the election in 2020–because I think Trump thinks that ongoing fight is likely to help him.

        1. Isn’t everyone talking about an agreement they haven’t seen?

          Everything you read here is speculation …. or snark.

          1. We know what Lighthizer, the U.S. Trade Representative who negotiated this deal, says is in the deal, and we know what the Chinese have confirmed.

            This is a summary:

            “The U.S. canceled plans to impose fresh tariffs on $156 billion in annual imports of Chinese-made goods—including smartphones, toys and consumer electronics—that were set to go into effect Sunday. The U.S. will also slash the tariff rate in half on roughly $120 billion of goods affected on Sept. 1, from 15% to 7.5%.

            U.S. tariffs of 25% would remain on roughly $250 billion in Chinese goods, including machinery, electronics and furniture. In exchange, officials in Washington said China agreed to increase American agricultural purchases by $32 billion over previous levels over the next two years . . . . The farm purchases would be part of total additional exports of $200 billion over two years”.

            . . . .

            Mr. Lighthizer also said China made specific commitments on intellectual property, including counterfeiting, patent and trademark issues and pharmaceutical rights, as well as on preventing the forced transfer of technology from firms entering the Chinese market. He and Chinese Vice Premier Liu He are expected to sign the deal in early January, with the pact entering into force 30 days later, Mr. Lighthizer said.


            That’s all good stuff, especially the part about Trump dropping all those tariffs. What it also means is that the trade war may have bottomed out. If they have a deal in principle, things aren’t likely to get worse, and that wasn’t clear the day before yesterday. It’s a good day for trade and good day for the economy.

            1. Yeah, to me Ken, what have we really ‘given’ here? Not very much. The math comes out to a net 10% reduction of tariffs. Honestly, not very much here in exchange for substantial (whatever that means) agriculture purchases from China. Additionally, China undertakes reform of their legal system to not force technology transfer. I’ll take that that trade, pardon the pun. Why?

              We’re still keeping a knife at their throat. They’re still feeling the pain of the remaining tariffs. They have to spend hard money in a tightening credit market, and their economy is still under substantial economic pressure. I am a little surprised China agreed to it. They’re not getting much here.

              1. What they’re getting must be extremely important to them, which is an end to escalation tariffs and a reduction in the tariffs that exist.

                In the history of the world, there has never been a time when more people have been lifted out of the poverty of subsistence peasantry and into the middle class quicker. And it’s all pretty much happened since China joined the WTO in 2001.

                Their economy keeps growing at lower and lower rates, year after year after year. They’re normalizing. When we have a recession, we throw the president out, like we did with George H. W. Bush, we form a Tea Party, like we did when Obama was in office, and we scream bloody murder at the politicians while the banks they protect repossess our homes.

                I suspect that will be nothing compared to what happens when China experiences its first recession since joining the WTO, and it will happen eventually. You can no longer get a new phone in China unless you use facial recognition on the first boot up and scan your face into a government database. The reason they spend so much money on surveillance, the Great Firewall of China, etc. is because they’re scared to death of what will happen to them if and when there’s a big recession.

                They see Hong Kong still protesting–getting even stronger–six months and going, and they wonder what they’ll do if the rest of the country goes like that. The problem with being the emperor is that there is no one else to blame when things go badly. There is no Congress or Courts to blame. Xi can’t even blame the corporations because they’re all headed by people who answer to him through the CCP or the PLA.

                The last thing Xi needs is a trade war with the U.S. If unemployment in China goes up 2%, that’s 16 million desperate people who are mad as hell at the government. He wants all the economic growth he can get, and that means exporting to the United States. If Trump gets kicked out of office, he’ll go back to Mar-a-Lago and his trophy wife. Emperors don’t get kicked out office. They end up with their head on a pike.

  10. Think of it as Ron Vara’s Canadian girlfriend.

    Or Ron Vara’s Canadian girlfriends best friend’s sister’s boyfriend’s brother’s girlfriend who heard from this guy who knows this kid who’s going with the girl who saw the trade deal pass out at 31 Flavors last night. I guess it’s pretty serious.

  11. Think of it as Ron Vara’s Canadian girlfriend.

    That’s gonna leave a mark.

  12. This Phase One agreement seems to be, at best, a face-saving way to back off from imposing costly new tariffs, and a way to punt the thorniest parts of the China trade dispute until after the next election. It comes with only modest tariff relief for U.S. consumers, doesn’t undo the worst losses of the trade war, and contains likely overblown promises about China’s ability to buy more American farm goods. But don’t be surprised if Trump acts like it’s a major victory.

    The Chinese are manipulating the election to get Trump re-elected. They saw how successful the Russians were and are doing the same thing. Trump is a puppet of the worst two regimes on the planet.

    Is it really necessary to add the sarc?

    1. “The Chinese are manipulating the election to get Trump re-elected. They saw how successful the Russians were and are doing the same thing. Trump is a puppet of the worst two regimes on the planet.”

      If it ain’t the Russkis, it’s the Chinks, dammit!

  13. O.T. Why don’t we ever see this guy at Reason anymore? Not TDS enough?

    1. He got a real job?

    2. NRO is only half TDS. Reason prefers 100%

    3. From the link:
      “Senator Ted Cruz: “A lawyer at the FBI creates fraudulent evidence, alters an email that is in turn used as the basis for a sworn statement to the court that the court relies on. Am I stating that accurately?”
      Horowitz: “That’s correct.”
      This isn’t a matter of “sloppiness,” as so many of the FBI’s defenders had insisted. A lawyer for the nation’s top law-enforcement agency, run by the Obama administration, concocted evidence and modified emails to use in warrant application, which was the “basis” of a sworn statement in court…”

      THIS POS is as close to a coup as I can imagine happening without the FBI marching in and cuffing Trump!
      And Obo’s defenders simply claim or imply that he had no knowledge of the criminal activities. Bullshit.
      And, outside of NR, crickets.

  14. If it turns out that the only concession the U.S. made in “phase one” is simply not expanding the tariffs, then any concession by China at all is a victory. No other way to spin it at all unless you are only committed to attacking the administration’s position.

    This is an unequivocal victory for the United States in the negotiations and it appears Trump was correct that the tariffs would eventually force China to the table. Considering China’s bullying on the global stage for decades it also happens to be cathartic.

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