Breaking China – A Beleaguered US President Caves First

A phase one first step, Trump describes it. But the trade deal with China brings virtually no tangible implementation of Trump’s primary stated goals. A little more than a standstill agreement with some fancy language about complex business practices and protection of American intellectual property but nothing specific, the new trade agreement bears little or no resemblance to the “best deal” ever with China. Not exactly the long term solution, the great “equalizer,” the cure for China’s “taking advantage of the United States” that has been the cornerstone of Trump trade requirements of China. It hasn’t even been drafted yet!

With impeachment in the press every day, with legal decisions pounding the Trump team, with GOP opposition to Trump’s move in northern Syrian and the litany of Rudy-related legal embarrassments, China knew Trump was particularly weak, desperately needing something that he could announce that at least sounded good. And they are really good at taking advantage of a weak opponent.

China clearly won this round. So very clearly. US farmers will pay the price, despite rhetoric over China’s commitment to increase agricultural imports from the US. No Donald, US farmers aren’t going to have to “immediately buy more land and get bigger tractors,” as you stated when you announced this stop-gap trade deal. Knowing that the United States is hardly a reliable trade partner, China has already shifted its agricultural buying practices to new, non-US sources. Despite the rhetoric, China is unlikely to swing open the doors to those US products and turn off the agricultural tap it has opened with other nations to replace some pretty basic US farm goods.

Don Lee, writing for the October 12^th Los Angeles Times, explains: “Trump said the agreement, which came after a resumption of high-level trade talks in Washington this week, would include a ‘tremendous’ increase in Chinese purchases of U.S. farm goods… like soy beans.

“He said that Beijing also would address American concerns about intellectual property, technology transfer, financial services and currency, although there was little specificity disclosed on most of these issues and Trump noted that this ‘Phase 1 deal’ was an agreement in principle ‘subject to being papered’ in the next few weeks.

“In exchange, Trump agreed to put off a relatively small step-up in tariffs on $250 billion of imports from China that was to take effect Tuesday. He left on the table the threat of new 15% tariffs on tens of billions of dollars of China-made cellphones, laptops and toys on Dec. 15, though Trump’s chief trade official, Robert Lighthizer, suggested that those duties also would be suspended if the agreement is finalized.

“All in all, the tentative deal marked progress after a breakdown in talks in May led to further escalation of tariffs, heightened tensions in bilateral relations, consternation in financial markets and pain for domestic manufacturers. ‘Finally, a ray of hope for the U.S.-China trade relationship,’ said Myron Brilliant, head of international affairs at the U.S. Chamber of Commerce.

“Yet in many ways, the agreement did little more than bring negotiations back on track to where the two sides were before spring. Significantly, there was no indication that Beijing was prepared to give ground on key structural issues, including industrial policies supporting Chinese tech companies, matters of cybersecurity and market access for sensitive areas like cloud computing.

“‘The deal seems to feature mostly issues that are politically safe for both sides,’ said Michael Hirson, head of the Eurasia Group’s China practice. ‘The really tough issues that are needed to reach a broad deal are getting kicked down the road.’… Moreover, he said, ‘I think of this as being a truce, but we shouldn’t be overly confident that this deal can be sustained, and there are real limits in the ability to improve broader U.S.-China relations.’

“For Trump, it was far from a major breakthrough or the kind of sweeping deal that he has promised in order to re-balance trade and address long-standing American concerns about China’s unfair economic practices.

“In remarks in the Oval Office, where he met with China’s top trade envoy, Vice Premier Liu He, Trump repeatedly highlighted the Chinese farm purchases, indicative of his desire to shore up support from farmers in key states where the trade war has hammered a core constituency as Beijing targeted retaliatory tariffs on soybeans and other farm goods.” Good luck with that hope.

              I’m Peter Dekom, and it seems that the Trump’s “The Art of the Deal” got crushed by China’s “The Art of War.”