Former President Donald Trump’s trade war with China is not going as planned, and one of his former advisers has finally admitted it.
this week, traffic lightMorgan Chalfant writes about potential trade policies for a second Trump administration. Toward the end of his first term, Trump struck a $200 billion deal with China. However, in a possible second term, Trump has proposed imposing an across-the-board 10% tariff on all imported products and imposing tariffs of up to 60% on goods from China, the United States’ third largest trading partner.
“I don’t think we’re going to see a deal like we did in the first term,” Robert O’Brien, Trump’s fourth and final national security adviser, told Chalfant. “I think people generally [the previous deal]but it turns out that the Chinese did not abide by it.
As we all know, Trump is keen on making deals and considers himself a master negotiator. He also takes a negative view of free trade, going against decades of Republican orthodoxy.
In March 2018, Trump tweeted that “trade wars are good and easy to win” — a confusing show of confidence that didn’t even take into account his lack of experience in shaping U.S. trade policy .
In practice, this means imposing tariffs of 10% to 25% on all Chinese imports, costing American consumers $42 billion in 2018 alone. China has also retaliated by imposing tariffs and reducing imports of U.S. goods; U.S. industries ranging from soybean farmers to craft breweries to Alaskan fishermen have suffered.
In January 2020, Trump reached what he called a “historic trade deal,” announcing that China agreed to “buy large amounts of agricultural products, energy, and manufactured goods.” Under the “Phase One” deal, China will purchase an additional $200 billion worth of U.S. goods over the next two years – $77 billion in 2020 and $123 billion in 2021.
Such claims “should be viewed with skepticism” reasonEric Boehm wrote at the time. 2017, before the trade war, was used as the base year for calculating additional purchases,”all U.S. exports to China are approximately $186 billion. This means that Trump requires China to increase its purchases of American goods by about 60%.
It turned out, as O’Brien now admits, that the deal was a complete bluff. But this shouldn’t be news to him.
Chad Bown of the Peterson Institute for International Economics (PIIE) writes: “In the end, China purchased only 58% of the U.S. exports it committed to buy under the agreement, not even close to its pre-trade war imports. level. not any The additional $200 billion in exports promised in the Trump deal. Washington post China “has not met the target” and “even if they buy in large quantities, they will not reach the target.”
Worse, the agreement will do nothing to repair the damage Trump’s trade war has already done. “After two years of escalating tariffs and talk of economic decoupling, the deal has done little to reduce uncertainty, hampering the business investment needed to restart U.S. exports,” Bowen wrote. “Most of Trump’s tariffs remain Effectively, especially on inputs, the deal raises costs for U.S. companies by failing to negotiate away China’s retaliatory tariffs. The deal could shift any demand for U.S. exports from China’s private sector to state-owned enterprises. ”.
Not to mention that Trump’s tariffs—combined with those imposed since President Joe Biden—continue to raise prices for Americans.
Indeed, promising huge economic results without delivering them is key to Trump’s record: After first announcing the $200 billion deal, he tweeted that “it will unite the United States and China in many other ways.” More closely linked. Of course, Trump’s anti-trade rhetoric is based on the trade deficit between the United States and China, which has increased as a result of his policies.
Trump touted his tough trade war stance to get the Phase One deal passed: “As a candidate for president, I vowed to take strong action,” he said when announcing the deal. “In fact, I think I delivered on my promise.”
What should be clear, then, is that Trump’s trade war has been a miserly failure overall, with prices rising for consumers while fewer American goods are being sold.
