Chinese and American officials supposedly agreed to a trade deal on Friday but, as you may have guessed when it was initially announced, there actually is no deal. At least not yet.
The two sides reportedly agreed to a tentative deal in which China would increase purchases of American agriculture if Trump does not increase his tariffs on $250 billion in Chinese goods from 25 to 30 percent this week, but even that is not official.
There's nothing in writing as their agreement was only verbal.
The details of the verbal agreement reached in Washington last week between the two nations remain unclear. While Trump hailed an increase in agricultural purchases as “the greatest and biggest deal ever made for our Great Patriot Farmers in the history of our Country,” China’s state-run media only said the two sides “agreed to make joint efforts toward eventually reaching an agreement.”
Mnuchin repeatedly said on CNBC that the countries have a “fundamental agreement” even though the wording and details are still to be worked out.
Bloomberg reports that China also wants an assurance that Trump won't impose tariffs on all remaining Chinese goods on December 15th before they sign a deal.
The big question is whether Trump will give that to them in exchange for nothing.
Mnuchin told the press that China would purchase up to $50 billion in American agricultural goods each year under their tentative deal, but that doesn't add up. That's more than China purchased in 2017 before Trump's trade war began so you'll have to forgive my skepticism.
Even if all the reports are true and the rumored agreement is real, it will not necessarily place us in a fundamentally different position than we're in today or where we were before Trump's trade war began.
Increased purchases of American farm goods would only marginally decrease our trade deficit and there's been no serious talk of China adopting the structural reforms the White House has been asking for. There's also no indication that eliminating all tariffs is on the table.
This is not the first time or even the second time that Chinese and Trump regime officials have reached a "fundamental" agreement (with talks collapsing the previous times) so all of this obviously subject to change.