Trade

Trump Claims He Won’t Sign a Partial Deal With China

Written by SK Ashby

There have been rumblings that Trump might sign off on a partial or temporary deal with China that rolls back his tariffs in exchange for, well, nothing substantive -- but for what it's worth (not much) Trump says he won't be doing that.

Trump's claim that he won't sign a partial deal actually prompted Chinese officials to cancel a planned trip to American farms.

A Chinese trade delegation canceled a planned visit to farms in the U.S. heartland, driving down stock indexes as investors turned pessimistic on progress toward resolving the two nations’ trade war.

The cancellation came only about an hour after President Donald Trump said he wasn’t interested in “a partial deal” with China based on Beijing increasing its purchases of U.S. agricultural products. U.S. and Chinese officials held negotiations this week and are aiming for a high-level meeting around Oct. 10.

Even though Trump says he won't sign a partial deal, I feel like we can't say that he definitely won't. It is Trump that we're talking about, after all, and his words are not necessarily something that anyone can depend on. You know, unless he's announcing something terrible. In those cases, it's usually true.

From a purely economic standpoint, a partial deal may not make a great deal of difference as long as it leaves a significant portion of Trump's tariffs in place. Financial markets would surely see a temporary bump from an announcement, but empirical reality will eventually settle in once traders realize that a temporary deal would actually perpetuate Trump's trade war for most if not all of the next year.

A partial deal would allow Trump to have his cake and eat it too by providing a temporary boost to markets while keep the issue relevant for his reelection campaign. That makes it a very appealing option that we can't rule out no matter what Trump says now.

It's also possible, of course, that there will be no deal and upcoming talks will actually prompt Trump to impose more or increase the size of his tariffs. Almost anything is possible.