Trade

The “Greatest and Biggest Deal” That Doesn’t Exist

JM Ashby
Written by JM Ashby

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.

From Bloomberg:

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.

  • muselet

    When Donald Trump descends into hyperbole and superlatives (“the greatest and biggest deal ever made for our Great Patriot Farmers in the history of our Country”), whatever he’s peddling is probably junk. If—big if—there actually is a verbal agreement with China that even slightly resembles what the Trump administration says, I’ll eat my hat.

    –alopecia

    • Draxiar

      I don’t believe anything coming out of trump’s mouth or his administration. I suspect China doesn’t either. Not for nothing, I don’t trust China in any of this. They do operate with nefarious methods with intellectual property theft and their human rights abuses are legendary. That said, the way trump is going about this is born out of egotistical stupidity and recklessness.

    • Christopher Foxx

      When Donald Trump descends into hyperbole and superlatives, whatever he’s peddling is junk.

      And Donald Trump always talks in superlatives.

      • muselet

        True. Most of the time, though, it’s just one or two times in a sentence. When he’s in full-on carny mode, he lays the superlatives on with a proverbial. It’s one of his (many) tells.

        –alopecia

  • gescove

    I find it incredible that the stock market ticked upwards last week on “optimism on trade negotiations progress”. Doesn’t the market understand by now that literally nothing this WH says is true and subject to change in a moment on a whim?

    • David Greenberg

      WTF. The people running the stock market will use any excuse to “churn”.