Trade deals are easy

Back in October, financial markets and other interested parties woke up to the exciting news that, according to Donald Trump, the United States had reached a “very substantial phase-one deal” with China, constituting the first step in a series of steps that would hopefully end the longtime trade war with Beijing and make the pain that American farmers, companies, consumers, and the economy at large had suffered over the last two years all worth it in the end. Like most Trump proclamations, though, this one turned out to be a lie.

  Vanity Fair

Shocking.

We knew this both in real time, as news outlets reported that China wanted another round of talks before even thinking about signing “phase one” of the trade deal and on Tuesday, it was made yet more clear when Trump again announced striking a phase one deal—more than two months after he’d already claimed one had been clinched.

How many times does that make that he's announced a great deal with China that didn't actually happen?

While Trump has lied about negotiating a deal with China numerous times by now—in December 2018, he bragged to reporters that he’d struck an “incredible” deal with President Xi Jinping that blew up in his face less than 24 hours later; in August, a breakthrough call with China turned out to be fictional—at this point, there’s no suggestion that he is, once again, just making shit up as he goes along. That’s the good news. The less-good news? His big, terrific phase one deal appears to accomplish very little, and on a matter that both the president and his top advisers have said is crucial to bringing fairness to the markets, literally no progress has been made.

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In other words, one of the major reasons Trump launched his trade war has yet to be resolved, and while getting a “phase one“ deal sounds well and good, it’s not at all clear that President Art of the Deal will be able to advance to beyond that (though he’ll assuredly claim as much in an quickly debunked tweet some time soon.)

Trump insisted for months that he wanted to resolve all outstanding trade issues with China in a single, comprehensive accord that would refashion the Chinese state’s economic role. As late as September, he rejected talk of a partial agreement, saying instead that he wanted “the big deal.”

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The two sides discussed industrial subsidies in the early rounds of negotiations over an agreement that exceeded 150 pages. But Chinese officials resisted making structural changes, and by the time officials settled this month on an 86-page partial accord, any commitments to reduce subsidies had been excised.

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Under Chinese President Xi Jinping, who lacks his predecessors’ enthusiasm for the free market, the state spigot has gushed aid. China now devotes more than 3 percent of its annual output to direct and indirect business subsidies — a share of the economy that is roughly equivalent to what the United States spends on defense.

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Some of that aid is similar to programs in the United States and other advanced nations, encouraging companies to retrain workers, use less energy or otherwise support government goals. But much of it is divorced from any consideration of profit and loss. So it fuels excess production of goods like steel, which spill into global markets, depressing prices and making it hard for American companies to compete.

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Beijing’s aid gives Chinese companies an important edge in other markets.

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But this massive program of government assistance has proved a double-edged sword for China. State help enabled Chinese manufacturers to dominate markets for products such as auto parts, but it also has left the economy riddled with unprofitable “zombie” firms and suffering from pervasive inefficiency, economists said.

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Even as they underperform, state companies continue to enjoy easy access to loans from state banks. Meanwhile, private companies with brighter prospects often struggle to obtain credit.

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Trump on Tuesday tweeted he would sign a “Phase One” trade deal with China at the White House on Jan. 15 and travel to Beijing at a later date to begin work on a second agreement. But White House officials have acknowledged that some key issues remain unresolved.

Lighthizer has said “a lot of hard things” have been left to future talks, which most analysts say will be arduous and unlikely to bear fruit before the November election.

  WaPo

He'll just keep lying and saying he made a great deal. His base will buy it.

Though Trump launched the trade war to get China to change practices including its numerous subsidies, the commercial conflict has only convinced Xi to accelerate efforts to become self-sufficient — no matter the cost.

...but hey, do what you want...you will anyway.