Trump touts 'great' Chinese trade deal that doesn't actually exist

Daniel Fowler
October 15, 2019

China will struggle to buy $50 billion of US farm goods annually unless the United States removes retaliatory tariffs on American products, Bloomberg reported on Tuesday.

Exports dropped 3.2% year on year, while imports also fell sharply by 8.5%, Chinese data show.

Exports to the U.S. fell by 22 percent, while imports from the United States dropped by 16 percent.

As part of a cease-fire deal announced Friday, China agreed to buy up to $50 billion in US farm products, while the Trump administration said it would suspend a tariff increase on $250 billion worth of Chinese imports that was set to take effect Tuesday.

And the president said the Chinese agreed to buy $40bn to $50bn in U.S. farm products.

"We expect shrinking exports will likely be one of the biggest drag on China's economic growth in the coming months, as the tariff impact will be further in place, along with the pay-back effects", said Ting Lu, chief China economist at Nomura. The Trump administration still has in place tariffs on more than $360 billion worth of Chinese imports, while Beijing has lashed back by taxing about $120 billion in USA goods.

September exports fell 3.2% from a year earlier, the biggest fall since February, customs data showed yesterday. Before Chinese President Xi Jinping signs the "phase one" trad agreement, the nation's negotiators want to add more detail.

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Chinese growth fell to its lowest level in at least 26 years in the quarter ending in June, decelerating to 6.2 percent over a year earlier.

It has been over a year since the opening salvos were launched in the trade war with China. Increased exports to Britain, other European countries and developing markets such as Vietnam, helped offset some losses.

McGregor, who has been monitoring the US-China trade row closely from day one, does not anticipate future stalemates, since both sides "are more eager to endorse a bilateral trade agreement", according to him.

The U.S. Federal Reserve has made similar forecasts, cutting 1%, or $850 billion off global GDP.

Trump has postponed raising the tariff on Tuesday for 250 billion dollars of Chinese goods.

Meanwhile, the USA is still scheduled to target another $160bn in Chinese goods starting on December 15, a move that would extend Trump's tariffs to virtually everything China ships to the US. Senior officials will then meet in Santiago, Chile, on the sidelines of the Apec meeting, before the summit where Mr Trump and Mr Xi are expected to sign the pact.

The trade deal Trump announced, which indefinitely suspends tariffs that were supposed to kick in October 15, would only lessen the "trade drag" on the global economy by 0.1% of GDP, Oxford Economics wrote in a note just after the White House press conference, headlined "Itsy-Itsy-bitsy-teeny-weeny handshake deal with China".

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