‘perhaps there will be a phase two A, phase two B’

Written by SK Ashby

I'm pretty sure there will never be a "phase two" of Trump's "greatest and biggest deal ever" with China, but Treasury Secretary Steve Mnuchin says "phase two" could even have multiple parts.

There's no date set for talks to begin and no reason to think China would agree to make sweeping reforms to the structure of their own economy during an election year in the United States, but that did not stop Mnuchin from writing his own fan fiction.

“We expect it will be fully executed in January. And then we get to ‘phase two’,” Mnuchin told the Doha Forum conference in Qatar. “The most important issue is - lets make sure we implement ‘phase one’ with an enforceable agreement, which it is. And then we start negotiating ‘phase two’.

“There are important issue left in ‘phase two’. And perhaps there will be a ‘phase two B’ and ‘phase two C’. We will see,” he said.

The only way this seems plausible is if Mnuchin is actually detailing a campaign gimmick in which Trump will occasionally cave in over the course of 2020 to generate positive headlines for himself even if our trade relationship with China isn't fundamentally changing.

In any case, Mnuchin also claimed that "phase one" of Trump's deal will have significant implications for global growth, but that's even less likely.

Trade disputes between the United States and China can and have weighed on global growth, but it's unlikely that "phase one" will make a significant difference here in the United States much less the entire world. The vast majority of Trump's tariffs and China's retaliatory tariffs will remain in place under the deal and the global manufacturing recession will likely continue. A nascent Chinese commitment to buy an unspecified amount of American pork and soybeans over two years is not going to miraculously jump-start the global economy and probably not even our own.

Regardless of what happens between the United States and China, Trump is also cultivating a broader trade war with Europe and Britain is about to exit the European Union. Much of the headwind that dampened global growth is still with us.