Phase One: Pressing Pause on the China-US Trade Conflict

U.S. President Donald Trump and Chinese Vice Premier Liu He signed the agreement earlier this month (Source)

Trump’s phase one trade deal with China, negotiated last week, is posed to assuage economic uncertainty between the U.S. and China in the short term. For many Americans, this is the first glimmer of hope in a seemingly never-ending trade war. The layout of the announcement last Wednesday, Jan. 15, was straightforward, and each side brought little to the table. The U.S.’s side deals mainly with the intense tariff increases that have taken place since Trump took office. Chinese imports are now taxed at 19.3 percent, significantly higher than the 3 percent in 2016, but with the new trade deal, the U.S. will no longer continue raising these tariffs. On the other side of the Pacific, China promised to buy increasing amounts of American goods over the next two years. Both of these things will make it a little easier for American companies to do business in China. For now, there is a hold in the tensions between the two countries and the pact hopes to open more Chinese markets to American companies.

This is likely not, however, a long term solution for Trump or the American economy. Trump has extreme confidence in the deal, going so far to say that his team is “righting the wrongs of the past”. Optimism can be a good thing, but misplaced confidence in this solution come back and hurt the American economy and American people. 

There are, undoubtedly, may good things that can come from this deal if it goes as Trump is expecting. Working against the corruption of foreign companies and trying to combat job losses by outsourced labor is a great idea, but to accomplish this, there must be a more substantial agreement written. Critics note that the deal as-is does not cover many issues the U.S. and China have in, for example, the technological sector. Problems of cyber security continue to worry Americans and the Chinese government “rejected demands that the text include promises to refrain from hacking American companies, insisting it was not a trade issue.”

Trade deals are great media fodder for an administration, and this one might even be a good thing in the short term, there is much more to be addressed before one can say for sure that this is a boon to the U.S. the way Mr. Trump touts it to be. Phase one is underway, but it is surely a baby step to a long term solution.