By Dr Anita Perkins
The US Government recently announced plans for a let-up in its trade war with China. On 11 October, President Trump announced that China and the United States had come to an initial consensus on a trade deal agreement. The agreement was summarised by the Wall Street Journal as: “Washington to hold off on ramping up tariffs, and Beijing agrees to boost purchases of U.S. farm goods.”1 CNBC reports on doubts over this deal: “During trade talks last week, President Trump said China agreed to purchase about $40 billion to $50 billion worth of U.S. agricultural products “in less than two years.” China has not confirmed a time frame or a figure amount for the purchases.”2
Fox News makes note of the ongoing economic impacts of the trade war between China and the US: “The economies of both the U.S. and China have suffered as the trade war has dragged on. China’s gross domestic product growth slowed to 6.2 percent in the second quarter, its weakest in 27 years. Meanwhile, the U.S. grew at a 2 percent rate in the April-to-June period, down from 3.1 percent the prior quarter.”3 Fox News also casts doubt on the likelihood of China’s investment into US crops.
The South China Morning Post sought the opinion of Clete Willems, former special assistant Trump on trade and economics, on this topic. Willems claims that the US built an algorithm to ensure initial tariffs maximise the pain on China and minimise the pain on the US consumer. Willems added to this: “The more tariffs you put into place, eventually you’re going to get to the ones that hurt the US more than China and we’re getting there now.”4
Politically, economic commentators are predicting that the agreement between the US and China will not have a big impact in restoring relations between the two superpowers. Willems points to rising nationalism in both countries as a barrier to concluding a comprehensive trade deal.5 Further, some analysts are concerned that Trump’s trade policies in general are increasing uncertainty and contributing to the slowing of the global economy, particularly in Europe. The New York Times quotes Gita Gopinath, the director of the research department at the International Monetary Fund: “The major risk to the global economy is a further escalation in trade and geopolitical tensions.” […]. “This can derail an already fragile recovery in emerging and developing economies and in the euro area.”6
1 https://www.wsj.com/articles/trump-strikes-upbeat-notes-on-trade-talks-11570804097
2 https://www.cnbc.com/2019/10/16/there-are-doubts-about-chinas-promise-to-purchase-more-us-farm-products.html
3 https://www.foxbusiness.com/politics/us-china-trade-ag-purchases-50b-may-take-2-years
4 https://www.scmp.com/economy/china-economy/article/3033172/us-fears-over-economic-damage-further-tariffs-china
5 https://www.scmp.com/economy/china-economy/article/3033172/us-fears-over-economic-damage-further-tariffs-china
6 https://www.nytimes.com/2019/10/16/business/china-trade-deal-economy.html
