'Nothing burger': US-China trade truce kicks can down the road

Clay Curtis
October 15, 2019

Largely unaddressed are the core USA complaints about China's state-dominated economic model that gave rise to the trade war in the first place, people familiar with the recent talks said: That China coerces the transfer of foreign technology as the price of doing business there and unfairly subsidizes state-owned enterprises, fueling excess capacity that swamps global markets.

While he lauded China for agreeing to buy as much as $50 billion in agricultural products, he left tariffs in place on hundreds of billions of dollars of Chinese products, raising concerns that tariffs will become the "new normal".

At their peak in 2012 and 2013, when a drought in the U.S. had sent the prices of agricultural commodities to record levels, exports to China reached no higher than $26 billion. If that doesn't happen, the new USA import taxes on Chinese products will be imposed starting December 15, he said.

"We made substantial progress last week in the negotiations", Treasury Secretary Steven Mnuchin said Monday on CNBC. In exchange, the US will delay the tariff increase due Tuesday as the deal is finalized.

Given Canada-China relations at this time, Canadian agricultural products, already hurting from Chinese bans, can expect to be at the top of the list of those exports to be displaced by sales of American products.

But officials on both sides have said more work is needed to finalise the accord, and Trump acknowledged the agreement could still collapse.

Should the December tariffs go into effect, China would likely respond by imposing retaliatory tariffs on US goods at what would be the peak of the holiday shopping season.

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Fox Business Network's Mornings With Maria host Maria Bartiromo announced she is "not buying" President Donald Trump's supposed deal plan with China, Monday, and accused the Trump administration of "overselling" it while giving China what it wants for little in return.

China perhaps gained much more than the USA without yielding much ground as Trump's need to pacify the farmers was a byproduct of the whole trade war he ratcheted up.

Before the trade war started, the outlook for the global economy was sunny. China responded in kind, and both sides have steadily taken additional measures to increase tariffs and retaliate against each other economically.

The emerging deal, covering agriculture, currency and some aspects of intellectual property protections, would represent the biggest step by the two countries in 15 months.

U.S. Sen. Chuck Grassley, Republican of Iowa, a state hard hit by loss of soybean and pork sales to China, said he welcomes news that progress may have been made in some areas of the trade dispute with China but he said a final deal must address the full scope of structural issues and include strong enforcement mechanisms.

The country's politically sensitive trade surplus with the United States contracted by 16.5% from a year earlier but stood at $25.9 billion. He voted for Trump and said he supports a better trade deal with China.

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