Trump's Amazing Trade Deal: Details a Complete Mystery

Mish

At long last we have a deal. And it's an amazing one. For everybody. What's in the deal, however, is a mystery.

The Wall Street Journal reports U.S., China Agree to Limited Deal to Halt Trade War.

The limited agreement, capping months of sometimes-testy negotiations, calls for China to purchase more products from American farmers and other exports, U.S. officials said. In return, the U.S. put the brakes on new tariffs set to take effect Sunday and agreed to reduce some existing levies. Both sides termed it a “phase one” deal and said negotiations would continue on remaining issues.

Mr. Trump called the deal “phenomenal” and told reporters in the Oval Office that the U.S. would continue to use the remaining tariffs as leverage in future negotiations with China.

“I say affectionately that the farmers are going to have to go out and buy much larger tractors because it means a lot of business, a tremendous amount of business,” Mr. Trump said.

But doubts remained, with some critics claiming the deal amounted to little more than China agreeing to step up U.S. farm purchases and not make the kind of long-term economic changes that U.S. officials have said are needed to level the playing field for businesses.

As part of the deal, the U.S. canceled plans to impose fresh tariffs on $156 billion in annual imports of Chinese-made goods—including smartphones, toys and consumer electronics—that were set to go into effect Sunday. The U.S. will also slash the tariff rate in half on roughly $120 billion of goods affected on Sept. 1, from 15% to 7.5%.

Can't Look Under the Hood

OK. China will buy some more soybeans, but probably no more than they were buying before. In return, Trump phases out some tariffs. Otherwise it's top secret. Shhhh.

Neither government submitted a full text or even a detailed summary of the deal, hamstringing efforts to determine the winners and losers in the world’s two biggest economies or the quality of the agreement.

Disagreement Over the Non-Details

Although we have no details because the deal is a secret, we already have disagreements regarding the what's under the hood.

Vice Commerce Minister Wang Shouwen, one of China’s lead negotiators, said the U.S. had agreed to remove the remaining tariffs on Chinese products “in stages.” Mr. Lighthizer said there was no agreement on that, and suggested China believes further reductions could be negotiated in subsequent phases of the deal.

No Guarantees

Guarantees violate WTO rules, so, whatever is under the hood, guarantees cannot be part of it.

Chinese negotiators, led by Mr. Liu, President Xi Jinping’s point man on U.S. trade, balked at guaranteeing the purchases for fear that such managed trade could violate the rules of the World Trade Organization and cause friction between China and its other trading partners.

“China has yet to confirm this pledge or provide any details on how they will meet it,” said Brian Kuehl co-executive director of Farmers for Free Trade, which backs removing tariffs and opening markets. “There are rightfully many doubts about the president’s claim that China will purchase $50 billion in ag products in a single year—more than twice the level of pre-trade war annual purchases.”

US Agrees to Buy More Ag Products From China

China will not disclose it's actual commitment. And the US won't do so either. But this line caught my eye.

Chinese officials, declining to specify how much China expects to buy from the U.S. as part of the near-term deal, also said the U.S. had agreed to increase its imports of Chinese agricultural products.

This is hard to digest without specifics, but it appears China will buy more soybeans if the US will buy more baby food, water chestnuts, or dog food.

Urgent Task

Liao Min, China’s Vice Finance Minister and a trusted aide to Mr. Liu, the chief negotiator, said: “The urgent task right now is to get the phase-one agreement signed and implemented.”

Silly me. I thought the urgent task was to keep everyone from looking under the hood.

Of course, that presumes there is a car.

No Mystery on One Key Idea

Mike "Mish" Shedlock

Comments (26)
Augustthegreat
Augustthegreat

Trump is a real stable genius! He bought back the votes of the farmers that he lost with the tradewar! Tradewars are really good and easy to win!

No. 1-21
BaronAsh
BaronAsh

"It is exactly as we thought it would be. There are multiple interests, nuances in details, a completely overlooked big picture, and the financial pundits are flummoxed.

CTH has followed the granular details over several years. In advance of a “phase one” announcement we noted a necessary paradigm shift needed to understand most of the dynamics at play [SEE HERE]*. It is all going according to a very visible plan.....

This is where the U.S. reviewer paradigm shift is needed. Remember: “There is no actual intent to reach a trade deal with China where the U.S. drops the tariffs and returns to holding hands with a happy panda playing by new rules. This fictional narrative is a figment of fantasy being sold by a financial media that cannot fathom a U.S. President would be so bold as to just walk away from China.”

President Trump doesn’t necessarily want China to comply with Western perspectives on free, fair and reciprocal trade. He doesn’t want it not to suck doing business in China. The goal of decoupling the U.S. from China is easier if U.S. companies are abused by China. In the bigger picture President Trump wants the U.S. companies to leave."

*[SEE HERE:] https://threadreaderapp.com/thread/1205247917403058181.html

lol
lol

Like that bs USMCA smoke n mirrors nonsense,another pretend deal,remember nothing in DC is real,it's all pretend,bait n switch,Trump just wants this to go away and if kissing Beijeng's ass will make it go away so be it.

thimk
thimk

"US Agrees to Buy More Ag Products From China". originally i thought that was a misquote .

Oh great more Chinese AG products . yum yum . they did produce an award winning wine though (with Uyghur labor). I have switched to EU foodstuffs as much a possible.

Tony Bennett
Tony Bennett

"We will begin negotiations on the Phase Two Deal immediately, rather than waiting until after the 2020 Election."

...

If I were a tad cynical ... now that Phase One put to bed ... DJT will use Phase Two "progress" tweets as means to drive stock market incessantly higher no matter the underlying economy ...

cudmeister
cudmeister

U.S. goods exports to China in 2018 were $120.3 billion. U.S. goods imports from China totaled $539.5 billion in 2018. A tariff is a tax imposed by a government on goods and services imported from other countries that serves to increase the price and make imports less desirable, or at least less competitive, versus domestic goods and services. The problem that I see here is that the US no longer produces many of the products that are imported from China, therefore tariffs on Chinese imports only serve to raise the cost to the US consumer of many products that we want and need that are no longer produced in the US. Tariffs are paid to the U.S. government by importing companies and are ultimately paid by the end user. This is a way for the government to raise taxes under the guise of doing something good for the US economy. No wonder there is no information available as to these trade agreements. There probably never will be. And there will never be an end to this tariff war. It also helps to raise inflation.

Mish
Mish

Editor

h/t to @Tony Bennett for this addition

No Mystery on One Key Idea https://twitter.com/MishGEA/status/1205944137771560960

Others on Twitter and elsewhere made similar comments

RonJ
RonJ

"Trump's Amazing Trade Deal: Details a Complete Mystery"

Kind of like a FISA court.

AshH
AshH

Is this Trumps impeachment wag-the-dog moment? I'll believe it when the deal is signed and the details come out.

Scooot
Scooot

I think this trade deal is a red herring. The liquidity crisis is more important.

ksdude69
ksdude69

So back to like it was before. DOW +400 on monday, on top of new highs from nothing but jawboning the entire time.

Greggg
Greggg

Another "secret deal". I wonder what Qanaon has to say about that? He also said that phase 2 of the China negotiations would probably take place after the elections. Master strategy: String out the rhetoric to try and keep his election as viable as possible.

njbr
njbr

No details, no documents, no agreement on numbers, no signatures, no joint announcements.

Of course it's the biggest deal ever.

Sechel
Sechel

exactly how will trump guarantee the u.s. purchases more dog food from china? this has nothing to do with nationalism but I just don't trust china's food standards and refuse to buy food produced in china. i'll look at non-food items however

Sechel
Sechel

pretty sure china was always willing to buy more agricultural goods from the united states as a way of making the trade war go away. the real issue is intellectual theft and i've yet to see any real details of how this important issue is being solved. in my view until trump provides us with this detail he gets no credit. he's not exactly honest about a great many things

killben
killben

"Trump's Amazing Trade Deal: Details a Complete Mystery" ... A sort of The emperor has no clothes. No one can see the deal but who is gonna shout out. Also, market loves it. After all Phase 1 done (an amazing one mind you, though you may not know what is it all about.. just go by my tweet) Phase 2 under the works, work will go on till the elections.

Webej
Webej

I have an amazing new car. The dealer doesn't know about it. It has no wheels nor an engine, but it goes really fast, without any noise whatsoever. It's truly amazing. Most amazing car ever.

numike
numike

Utah is a mess: Salt Lake City, UT Housing Prices Crater 10% YOY As One Broker Shares, “People Just Want Out Of Utah.”

*Select price from dropdown menu on first chart

Zardoz
Zardoz

Trump is like Lucy setting up that football, and his followers end up flat on their backs like Charley Brown every time. The only difference is they shout FIELD GOAL! Each time, while the other kids stare incredulously.

luce0502
luce0502

I also think the same thing. This is a way for the government to raise taxes under the guise of doing something good for the US economy. No wonder there is no information available as to these trade agreements. There probably never will be. And there will never be an end to this tariff war. It also helps to raise inflation.


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