With Deadline Looming, Can US-China Trade Deal Get Done?

National News

Are
President Donald Trump and Chinese President Xi Jinping ever going to make a trade
deal? Can they make a deal?

According to
the White
House
, the two sides are still far apart on outstanding issues, such as fair
access to Chinese markets. Unless a deal, or even an extension, is made before
March 2, the cost of trade between the U.S. and China will increase again.

The Trump administration
has already imposed new tariffs, or taxes, ranging from 10 percent to 25
percent on $250 billion worth of goods Americans buy from China. There are 5 percent
to 25 percent tariffs on $110 billion worth of goods Chinese buy from
Americans.

This $360
billion worth of cross-border trade includes a wide variety of agricultural,
industrial, energy, and commercial goods.

Trump was
recently optimistic about a future meeting with Xi. He’s also been optimistic that
a deal can get done.

Certainly,
before March 2, the two sides could reach a deal—one that includes both nominal
purchases of U.S. goods and structural reform in China.

To think
every outstanding issue the White House has with China has to be resolved
before a deal can be made is unrealistic. It also takes away the importance of
having a continued dialogue with Chinese officials.

The U.S.
needs to continue engagement with China on economic issues, given that it’s the
country we trade the most with. Between 2017 and 2018, the U.S. and China
traded $749
billion worth
of goods and services.

Moreover, as
of 2017, U.S. companies have invested as much as $108 billion in China,
making it the 15th-largest destination for U.S. overseas investment.

On
Feb. 14 and 15
, U.S. Trade Representative Robert Lighthizer, the lead for
the U.S. negotiating team, will travel to Beijing with Treasury Secretary
Steven Mnuchin to continue talks.

Again, White House officials have signaled there’s been significant progress in the talks, but continue to suggest it might not be enough.

Meanwhile, the
politics behind getting a deal done has gotten interesting.  

The U.S.
team wants to continue to show China and the world that pressure in the trade talks
have worked toward bringing Beijing to the negotiating table. Also, the U.S.
continues to show it maintains fair amounts of skepticism toward any potential
deal. They do this to potentially maximize the results they can get out of
Chinese negotiators.

Trump emphasizes
that these negotiations will lead to a “trade
deal.”
He and others in the White House do this to fit the narrative that the
Trump administration is signing new trade deals.

However, the
U.S.-China talks aren’t technically a trade deal at all. It’s really just an
executive agreement between the two sides, with the commitments to reform on
the Chinese side.

Unlike a real trade agreement, it will require no change to U.S. law, and so no action by Congress. Neither will it be a treaty, so no Senate action is necessary.  

China’s
leadership wants to distance any reforms it makes away from the trade talks. That
includes reforms of China’s investment rules, intellectual-property laws, and
tariff levels over the past year.

The last
thing the Chinese Communist Party wants is any indication that a foreign
government (in this case, the U.S.) has had any effect in changing China’s
domestic policy.

Chinese state media have also been downplaying progress of the talks. Various outlets continue to paint a picture that China is a victim of unilateral U.S. action.

Whether or
not the U.S. and China can make a deal before March 2, rest assured that
investors will be hanging on every word that comes out of the White House over
the next three weeks.

It will
likely be a bumpy ride for the markets.

https://www.dailysignal.com/2019/02/12/with-deadline-looming-can-us-china-trade-deal-get-done/

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