Trade Agreement Between China And America
The deal signed Wednesday contains some victories for Mr. Trump: China has pledged to buy an additional $200 billion in U.S. goods and services by 2021 and to act against trade practices that the Trump administration has criticized. But the text of the agreement does not provide enough information to determine how it will work in practice, and it is unclear whether China will interpret it differently from the United States. U.S. sales of cars, trucks and parts also fell to just 33 percent of the annual target. Before the trade war, China was the second largest export market for U.S. vehicles. In July 2018, China reciprocated against Trump`s tariffs with a 25% tariff on U.S.
cars. U.S. exports then fell by more than a third due to the offshoring of production to Chinese consumers and the absence of a recovery in U.S. exports since then. Tesla, for example, announced in late 2018 that it would accelerate the construction of a new factory in Shanghai and relocate production from Chinese consumers to the United States. The company said Trump`s tariffs on auto parts and China`s retaliatory measures on finished cars have not made U.S. exports to China competitive. In response to this trade war policy, BMW has also relocated some of its production from South Carolina to China.5 Economist Paul Krugman said in September 2020 that if Democratic candidate Joe Biden wins the U.S. presidential election, he should maintain a tough stance on China, but should focus more on industrial policy than on trade tariffs.  The agreement ends more than two years of tense negotiations and threats of escalation that sometimes seemed destined to plunge the United States and China into permanent economic warfare. Lord.
Trump, who ran for president in 2016 promising to crack down China, urged his negotiators to rewrite trade terms he said had destroyed American industry and jobs, and he imposed record tariffs on Chinese goods in a game of chance to get Beijing to meet its demands. As president, he backed the tariffs and said China would cost the U.S. economy hundreds of billions of dollars a year due to unfair trade practices. After imposing tariffs, he denied entering a trade war and said that “the trade war was lost many years ago by the stupid or incompetent people who represented the United States.” He said the U.S. has a trade deficit of $500 billion a year, with intellectual property (IP) theft costing an additional $300 billion. “We cannot allow this to continue,” he said.   Jim Schultz, a former White House adviser, said that “the United States has turned the naïve gaze of several presidential governments – Clinton, Bush and Obama – while China has erred in an unfair advantage in the international trade market.”  The agreement also contains commitments, at least on paper, to halt the forced transfer of US technology to its Chinese competitors. Companies have long complained that they have had to give up valuable technologies and trade secrets to do business in China. China has pledged not to require such transfers, even if companies apply for certain administrative licenses or authorizations. Trump said his deal was a blessing for farmers, who are among those most affected by the trade war. The deal involves significant commitments from China to buy agricultural products as well as aircraft, pharmaceuticals, oil and gas.
All these obstacles and complications add up to a policy failure. Whoever the president is, the U.S. must get China to liberalize its tariffs, eliminate non-tariff barriers, and rationalize its subsidies and other practices that distort economic incentives. In response to Trump`s trade war, China imposed additional tariffs on more than 50% of U.S. exports in 2018 and 2019. .