Free Trade

China Is Not Coming Close To Meeting Its Import Goals Under the 'Phase One' Trade Deal

That's probably because those goals were always completely unrealistic. Less than six months after the deal was signed, it's already coming apart.

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When the United States and China called a truce in their trade war late last year, arguably the most important part of the deal was China's promise to increase imports of American goods by $200 billion by the end of 2021.

Don't get me wrong: There were other important details too. The United States agreed to forgo another planned tariff increase that would have hiked prices for many consumer goods, and both sides agreed to a framework for resolving long-standing disagreements over intellectual property. But for President Donald Trump, who has complained for years about America's trade deficit with China, the promise that China would import more American goods was clearly the key element of the bargain—as evidenced by the fact that he keeps talking about it.

So how is China doing? Not great, Bob.

Through the first four months of 2020, China has imported only about 45 percent of what it would have had to buy to be on pace to meet the deal's goals, according to an analysis of trade data from both countries by the Peterson Institute for International Economics (PIIE). The so-called "phase one" deal between the two countries broke down the overall $200 billion promise into smaller, specific targets for agricultural goods, energy, and manufacturing outputs. So far, China does not appear to be close to hitting any of those goals:

Chad Bown, a senior fellow at PIIE, notes that the deal only stipulates that China must hit the year-end targets this year and next year. Still, the prorated totals for the first third of the year serve an illustrative purpose.

The COVID-19 pandemic is a factor. It has disrupted manufacturing and trade on both sides of the Pacific. But the bigger problem seems to be that the Chinese import targets were never all that realistic to start. As The Wall Street Journal noted shortly after the deal was made public, Trump was effectively asking for "an unprecedented jump in bilateral trade." To meet its obligations, China would have to hike its purchases of U.S. goods by 60 percent over the 2017 (pre–trade war) baseline.

That part of the agreement was "unrealistic at best" from the start, wrote Brookings Institution scholars Joshua Meltzer and Neena Shenai in February. Perhaps worse, the deal actually handed leverage to China for future negotiations. "Because these purchases are not market-based (if they were, the commitments would have been unnecessary), they actually create stronger U.S. dependencies on China," Meltzer and Shenai wrote. "Because of its state-led and controlled economy, China could gin up demand to try and meet these commitments, but the spigot could likewise be turned off at any point and for any reason."

Even if that doesn't happen, forcing the Chinese government to buy more American goods is also a poor way to encourage market reforms in China.

Neither side seems to care much now about the trade deal or the fact that China is unlikely to meet its obligations. This week, the Chinese government asked state-owned companies to stop buying American pork and soybeans in response to the United States threatening retaliation for China's crackdown on Hong Kong. If that happens, China's already-low purchases of U.S. agricultural goods are likely to fall further.

Meanwhile, Trump said last month that he has no interest in revisiting the trade agreement. "Somehow, I lost a little flavor for it," he told reporters on May 15, though he also told Fox Business he was "very disappointed in China" for failing to meet its obligations so far. While Trump's top economic advisers continue to defend the deal, the president's limited attention span seems to be focused elsewhere.

It now seems like the trade deal was always more of a political prop than anything else—a way for Trump to tout the supposed success of his trade war as he ran for re-election, while postponing any additional tariff increases until at least 2021. Shortly after the "big, beautiful" deal was signed in January, for example, he told farmers at a rally in Ohio they'd have to "buy bigger tractors" in order to meet the new demand from China.

But farmers, who have already borne the brunt of the Trump administration's costly trade policies, are likely to get shortchanged again. The Trump administration is reportedly preparing another round of federal bailouts for farmers hurt by the trade war—a far cry from the promise that a deal with China would motivate farmers to buy bigger tractors.

Now that the Republican Party has decided its 2020 campaign strategy will be focused on anti-China hawkery, last year's limited trade agreement probably matters less than it ever did. The only concrete accomplishment of Trump's economically destructive trade war is looking like a dud.

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  1. I’m against the tariffs but this is actually not bad. First big item is that much of the shortfall is in manufactured goods. Not only has coronaggedon impacted that, but so has Boeing’s inability to manufacture airplanes that don’t fly into the ground. Back in April a big Chinese operator canceled 30 of them.

    This is of course all the more reason why managed trade is so problematic. There will always be legitimate reasons why these goals won’t work, and so it is very difficult to have enforceable deals.

  2. “That’s probably because those goals were always completely unrealistic. Less than six months after the deal was signed, it’s already coming apart.”

    Or it may have something to do with COVID-19 shutting down the Chinese economy for months, only to have Europe and the United States to fall into recession–and stop buying Chinese imports.

    Regardless, the idea that Trump negotiated a leveraged deal with China that was so lopsided in our favor that China has a hard time living up to it isn’t a knock on President Trump at all–in an election year.

    This argument isn’t persuasive to anyone who needs to be persuaded. If you want to argue that the Trump administration was too hard on the Chinese, you might as well ask for a salary from the Trump reelection campaign, because all you’re doing with that argument is getting him reelected.

    The legitimate knock is that the remaining tariffs artificially make it more expensive for American consumers to keep their cost of living low in a time of economic stress. And another legitimate argument is that if we really want to see the remaining tariffs go away, we better hope that President Trump is reelected. Trump’s phase two deal with China was about getting rid of the remaining tariffs. Neither Biden nor the Democrats have any intention of getting rid of the tariffs at all.

    1. I think Boehm is suggesting something much simpler :

      (1) Trump only wanted a glorified photo op.

      (2) China knew that and gave him a photo op – nothing more.

      (3) Trump won’t act to save his so-called deal. He’s gotten his photo op.

      What can you dispute about any of that? It’s standard Trump 101. Look at his “deals” with Kin Jong Un. They were a total joke the minute the cameras turned off, but DJT doesn’t even deign to notice. Last Friday he was practically begging Iran to give him a photo op but they just laughed in his face. Aside from flailing incoherence, Trump’s response to the coronavirus pandemic has been one long continuous search for photo ops. And let’s not even mention the grotesque mess at Lafayette Square.

      It’s what you get when you opt for reality-TV-style entertainment from your president…..

      1. Dead on. It boggles the mind that Trump has supporters who think of him as some kind of serious person who follows through on anything (that doesn’t benefit him personally).

      2. Well, for one thing, you seem to be ignoring the tariffs Trump cut.

        “The United States will cut by half the tariff rate it imposed on Sept 1. on a $120 billion list of Chinese goods, to 7.5%.

        U.S. tariffs of 25% on $250 billion worth of Chinese goods put in place earlier will remain immediately unchanged. These could be rolled back as part of a Phase 2 trade negotiation, U.S. Treasury Secretary Steven Mnuchin said on Wednesday.

        Tariffs that were scheduled to go into effect on Dec. 15 on nearly $160 billion worth of Chinese goods, including cellphones, laptop computers, toys and clothing, are suspended indefinitely. China’s retaliatory Dec. 15 tariffs, including a 25% tariff on U.S.-made autos, have also be suspended.”

        —-Reuters, January 15, 2020

        “What’s in the U.S.-China Phase 1 Trade Deal”

        https://www.reuters.com/article/us-usa-trade-china-details-factbox/whats-in-the-us-china-phase-1-trade-deal-idUSKBN1ZE2IF

        If Boehm is criticizing President Trump for cutting tariffs because Boehm is in favor of cutting them, then that’s either a novel way to be pro-trade or, more likely, Boehm will take any opportunity to criticize Trump for doing anything–regardless of whether it’s pro-trade or anti-trade.

        P.S. President Trump’s reelection remains the clearest path to getting rid of the rest of the tariffs–whether we like it or not.

      3. I think you are right on here. Time and time again we see that optics are more important than results for Trump. His ever shrinking support continues to buy the enough of the show to keep him doing it.

    2. “Neither Biden nor the Democrats have any intention of getting rid of the tariffs at all.”

      This assertion is based on?

      1. Well, for one thing, the Democrats are openly hostile to international trade, generally speaking, and they’re hostile to trading with the Chinese specifically.

        Can you supply a link to a Democrat arguing against Trump’s imposition of tariffs because it hurts trade?

        Don’t waste too much time looking. You won’t find it.

        Incidentally, the Democrats are also hostile to capitalism domestically.

        1. I’m sure I can find links to Democrats arguing against Trump’s imposition of tariffs because it’s Trump’s policy.

          So, you don’t actually know what a Biden administration would do. “Neither Biden nor the Democrats have any intention of getting rid of the tariffs at all.” was just a very strong statement of a conjecture on your part, not based on any actual statements by Democrats supporting your conjecture.

        2. What I find hilarious is Ken selling Donald John Trump as the savoir of free trade. Black-is-White seldom comes so starkly black&white. I wonder how Ken would compare the last two Democratic presidents on free trade vs Trump. Obama aggressively pursued two mega-regional trade initiatives: the Trans-Pacific Partnership with twelve Pacific Rim countries and the Transatlantic Trade and Investment Partnership with the European Union. Bill Clinton had NAFTA.

          Trump? He added commas and semicolons to a re-jiggered NAFTA, just to put his mark on it it (like a dog pissing on a fire hydrant), but otherwise EVERYTHING he’s done has been to sabotage free trade, not to support it.

          Poor Ken. Has he been asleep through all of recent history? Presidential candidates of both parties traditionally disparage free trade while campaigning, because that’s good politics. Then presidents of both parties have supported free trade when in office, because that’s good for the country. The break in that long tradition is Donald Trump, who is still playing politics while in office. Why? Because DJT doesn’t really give a **** about for what’s best for the USA; he only cares about red meat for his political base.

          So keep up your Black-is-White work, Ken. These are lean times for entertainment; we can use all the yuks we can get. Why not expound more on how the “Democrats are also hostile to capitalism domestically” ? I’m sure there’s many a belly laugh in that….

          1. Putting the word mega in front of something that sucks doesn’t make it stop sucking lmao.

            God you’re pathetic.

    3. When you are a country that can make everything, especially for the entire world, you are pretty much self sustaining and the only imports you need is conspicuous items for the rich Chinese, like Cognac, Single Malt Scotch, fine American Bourbon, Rolexs’, Audi’s, Mercedes Benz and so on. That market in China is very small considering, the vast majority of Chinese are paid near poverty wages, and live in shacks.

      However, China does have something everyone in the world wants, at least what the global financiers want, it is not the goods they manufacture, it is their vast pool of cheap labor, hundreds of millions of people toiling for pennies, enabling international financiers and the vultures on wall street to rake in billions in profits for doing nothing but expediting trade or to put it simply, doing the work of a shipping clerk.

      Trump the chump’s tariff is only a ploy at placating his gullible, uninformed groupies with this phony tariff. The tariffs are only imposed on goods made by Chinese owned companies. Apple, for example and many other American owned companies, who continue to exploit cheap Chinese labor are paying no tariffs at all. That is because Trump, like his predecessors, is nothing more than a jester in the court of the Wall Street oligarchs. They choose the tune to which he dances.

      I hate to admit it, I voted for Trump and he turned out to be nothing more than an empty suit, a self centered, egotistical buffoon and a real hypocrite. As a private business person he purchased Communist Chinese steel for his building. He is a millionaire, he could well afford to buy American made steel. So where was his make America Great Again bullsh*t when it was his money that was on the line. The only thing he has achieved thus far is to divide and pit Americans against one another and one has to wonder if it is by design, by order of his Wall Street handlers.

      As long as the Chinese can provide the near slave labor work force to the greedy millionaires like Trump, they will always have a world demand for their goods, tariff or no tariff. If they really wanted to blow off Trump, they could simply decide not to send us anything. Since everything we consume is made in China, including all of our medicines, the country would go in a panic and It would take years for the US to gear up manufacturing in their own back yard and Trump would long be out the door, less he starts world war 3 with the Chinese.

      I also find it his acting full of machismo, mannerisms that reminds one of Mussolini, but when unarmed demonstrators showed up outside his fence, he quickly slid down into the bunker. It is no wonder this macho man dodged the draft during the Vietnam war, like all bullies, when confronted, they run away. At least Mussolini served, he was a wounded veteran of the first world war.

      1. So does that mean you’re voting for Biden?

      2. Lmao…a majority of the things you listed happened, or are rumored to have happened, before trump was elected… Yet you still voted for him?

        Get the fuck outta here you lying sack of crap. And the fact you call trump a bully shows you’re just s triggered cunt.

  3. China reneges on their end of the bargain and it’s not only Trump’s fault, but the deal is IMPLODING!!!111!!!!!!!1!!!!!!

    Iran reneges on their end of the nuclear deal and it’s not only not Obama’s fault, but the deal MUST BE PRESERVED!!!!!!111!!!!11!!!!!!1!!!!!!!

    1. Iran did not renege. President Trumps own administration verified Iran’s compliance. What Trump could not stomach was that President Obama administration brokered the deal.

      1. The Iranian accord is a fascinating example of bait&switch. We were all told Iran’s nuclear program was an existential threat against this country and its allies. We were told this threat had to be faced for the good of all.

        So Obama builds a coalition, slowly applies pressure, and achieves a deal that strips Iran’s supple of enriched uranium away, limits its ability to further develop bomb fuel, and has strict verification procedures. And Iran followed the pact to the letter; even Trump’s administration conceded that. Iran’s nuclear weapons program was shut down. So then what do we hear?

        1. The deal didn’t address Iran’s missile development.

        2. The deal didn’t stop Iran’s mischief in the region.

        3. The deal didn’t stop Iran from building up its conventional forces

        4. Iran was still our enemy; Iran got something from the deal; etc

        In short, anything and everything except that supposed existential threat from Iran’s nuclear program. Now (of course) Iran is back enriching uranium for bomb fuel. Thanks to Obama their previous stockpiles are gone, but it’s only time before everything we gained is lost. The coalition that pressured Iran is shattered. There is the slightest hint of a strategy or plan from this White House except to beg the Ayatollahs to please “make the Big deal” before November’s election. Yes, Trump specifically pleaded for a pre-election photo op.

        The Iranians treated this whinging offer with contempt, but that’s pretty much how the whole world sees Donald John Trump.

        1. You really love lieing to yourself. It’s no wonder everyone thinks you’re a joke.

          https://thehill.com/opinion/national-security/355949-iran-is-violating-the-deal

          The iaea wasn’t actually allowed to visit military sites, iran violated multiple parts of the agreement including limits on heavy water at least twice, violated numerous sections of the iran deal and ballistic missle treaties by test firing and selling ballistc missles in the time, and magically had around 100 more advanced centrifuges show up when trump axed the deal.

          Where’s hans brix when you need an ostrich from the iaea to stick its head in the sand?

          1. What do General Mattis, General McMaster, General Dunford, General Kelly, Rex Tillerson, Angela Merkel, Emmanuel Macron, the UN, IAEA, the United States Military (under Trump), the State Department (under Trump), and the CIA (under Trump), and the Joint Chiefs of Staff (under Trump) all have in common? They all said Iran was in full compliance right up to the point Trump pulled-out the accord.

            And you have …. (wait for it) …. little Alan Dershowitz!!

            Did you even read your own link? Didn’t you notice how thin it was? Just try reading with a more critical eye, searching for the details. You’ll then see just how little Dershowitz does claim. Notice he doesn’t claim Iran prevented inspection of nuclear facilities. His big reveal? Iran briefly exceeded its cap on heavy water by about .004%

            Meanwhile, Iran handed over 97 percent of its enriched uranium stockpile and 70 percent of the centrifuges used to enrich uranium. It stopped plutonium production and committed to dismantling its one plutonium reactor. But Alan says we couldn’t be sure if Iran wasn’t working on something somewhere, albeit non-nuclear. Yeah. That’s pretty much what he says.

            Well, one thing is for sure. Iran is now getting more and more centrifuges online and ramping their uranium enrichment. All the result of Trump’s pandering to people like you – someone who obviously knows next to nothing on this topic except it was Obama’s deal and Black Man Bad. Meanwhile, Trump now frantically begs the mullahs to negotiate. Because he’s utterly clueless how to undo the bungled mess he’s made.

            You know, imagine you were a tiny bit smarter or better informed. Maybe Trump would have then chosen some other type of red meat to push down your gullet. Something different than this clusterf**k disaster. It all could have been avoided….

            1. So you don’t acknowledge that Iran violated the agreement multiple times. And most importantly violated it twice related to its development and testing of ballistic missles during the period the treaty was in effect?

              Cool. Keep your head in the sand ostrich

              1. Dizzle : “So you don’t acknowledge that Iran violated the agreement multiple times. And most importantly violated it twice related to its development and testing of ballistic missiles…”

                The agreement has nothing to do with ballistic missiles.

                Good Lord, you’re so damn stupid you didn’t even know that….

          2. Sorry. I shouldn’t pile-on because you’re too pathetic a target, but….

            Hans Brix ?!?!??!

            Ok; let’s assume you meant Hans Blix, former head of the International Atomic Energy Agency. The whole world remembers this Swede as the person who insisted Iraq had no nuclear or WMD programs back in the day of W. Bush. The whole world remembers how Bush had every idiot, chump, dupe, rube, and lackbrain screeching Blix was Saddam’s tool.

            And after the U.S. overran Iraq and then tore that country apart? Who was proved right?

            Hans Blix. Completely totally one-hundred-percent perfectly right.

            My God; is it possible you didn’t know that ?!?

            1. I guess you never saw team America lmao. At least i know now you’re under 30 and probably a millenial bitch.

              And you didn’t read the part of the article where it wasn’t admitted until after we left the agreement that the IAEA was never allowed to access a single military site in iran. Much the same way they were led like ponies around Iraq.

              We also have satelite images of Iraq moving their wmds, mostly chemical weapons, to Syria in the weeks before we invaded. Now magically Assad has a mass stockpile of chemical weapons. Hmmm.

              1. Figures. You don’t know even the most rudimentary facts about the agreement we’re discussing. You fall flat on your face trying to make even basic points. Over and over you embarrass yourself.

                And it turns out your “sources” are a (not particularly funny) animation and tin-foil-hat crackpot nonsense. Alan Dershowitz is just the cherry atop that steaming turd.

                I guess that’s how someone becomes a Trump voter – getting their political information from cartoons and conspiracy-mongers that normal people don’t take seriously.

        2. Thanks for the analysis. This is a great example of President Trump’s contempt for President Obama. The Iranians were in compliance, even the deals initial critics in the Senate and in the middle east advised against pulling out of the agreement. But Trump had to show Obama. Your right just like all his foreign policy screw-ups, Iran, China, Korea, etc. Trump is trying anything to get back what he freely gave up.

  4. Maybe China is like the USA and their bureaucrats spend all of their budget at the end of the fiscal year so their budget isn’t slashed?

  5. For some reason, China has also turned down President Trump’s generous offer to be the mediator of disputes between China and India. Can’t imagine why they would have something against Trump right now.

  6. Say what you want about trade negotiations not going as well as the World’s Greatest Dealmaker promised, but my investment in Goalpost Movers, Inc is up over 15,000% since Trump took office.

  7. So we are now ignoring all of the bad actions of China during a pandemic that probably had a lot to do with the issues of import/export? Never change Boehm. never change. Wonder why numbers were missed…

    1. We know that China’s bad actions during the pandemic were tolerated because President Trump wanted a deal with China. He picked a trade war when he did not need to, we all saw how poorly that worked, then to correct the mistake of his tariffs Trump need to placate China at a time he should have been questioning them and taking action to prevent the spread of the virus to our country.

      1. Lmao you must be a parody. I get it now

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