Economy

“We’re putting the trade war on hold”

JM Ashby
Written by JM Ashby

War. What is it good for?

Apparently nothing.

Treasury Secretary Steve Mnuchin appeared on Fox News yesterday morning where he was the first member of the Trump regime to announce that Trump's budding trade war with China has been canceled for now.

“We’re putting the trade war on hold,” Mr. Mnuchin said on “Fox News Sunday.”

The reprieve came as many crucial details remained undecided, and trade experts warned that the suspension of tariffs could undercut Mr. Trump’s leverage and thrust the United States back into the kind of lengthy — and ultimately fruitless — negotiations with China that have bogged down previous administrations. [...]

“[Trump] could always decide to put the tariffs back on if China doesn’t go through with their commitments,” Mr. Mnuchin said.

It will be difficult for China to "go through with their commitments" because China hasn't actually made any commitments that we know of.

The Associated Press reports that while China has said it will purchase more American goods, they have not agreed to a target number.

After high-level talks Thursday and Friday in Washington, Beijing agreed in a joint statement with the U.S. to “substantially reduce” America’s trade deficit with China, but did not commit to cut the gap by any specific amount. The Trump administration had sought to slash the deficit by $200 billion.

Still, Mnuchin said the two countries had made “meaningful progress” and that the administration has agreed to put on hold proposed tariffs on up to $150 billion in Chinese products.

Trump tweeted this morning that China has agreed buy as much as American farmers can produce...


...but that was already the case before Trump launched his failed trade war. China was already the top export market for a number of American crops from soybeans to sorghum.

At the end of the day, China cannot commit to reducing our trade deficit by a specific amount because that's not the way the global economy works. China could purchase every single soybean or ear of corn grown by American farmers and it would still be dwarfed by the American economy's appetite for electronics, toys, and apparel. We will always import far more than we export.

Our trade deficit with China will probably continue to set new records during the remaining quarters of the current fiscal year but the second and third quarters could be especially bad as China has already retaliated against American agriculture by canceling future orders for certain crops.

  • muselet

    The Trump administration will eventually drop its trade war with China. China will then allow agricultural imports from the US to again enter China. The administration will then take a victory lap over the huge increase in ag exports to China.

    Of course, US ag exports to China will be less than before Donald Trump’s ill-considered trade war because other countries have filled the gap, but the administration will still crow and thump its collective chest, and will never speak of the US-China trade deficit again.

    I can’t help but wonder, what would the world be like if the US had a presidential administration that included people who understand international trade and people who are skilled negotiators? (I know, that’s crazy talk.)

    –alopecia

    • Yep. That’s the plan. Declare war, pretend to “win” war. Claim victory.

      They can’t actually win anything, so they have to make fake victories after they create a firestorm due to their stupidity and incompetence.