Trump's No Meat on the Bones Trade Announcement With China

-edited

The market rallied yet again on Friday on still more rumors of a trade deal with China. Details are lacking.

Phase 1

China walked out of negotiations with Trump last week because of Trump's insistence on an all encompassing deal.

Since Trump is more desperate than China, Friday's announcement should not surprise anyone.

Reuters reports U.S. Outlines 'Phase 1' Trade Deal With China, Suspends October Tariff Hike.

U.S. President Donald Trump on Friday outlined the first phase of a deal to end a trade war with China and suspended a threatened tariff hike, but officials on both sides said much more work needed to be done before an accord could be agreed.

But Friday’s announcement did not include many details and Trump said it could take up to five weeks to get a pact written. He acknowledged the agreement could fall apart during that period, though he expressed confidence that it would not.

Trump, who is eager to show farmers in political swing states that he has their backs, lauded China for agreeing to buy as much as $50 billion in agricultural products. But he left tariffs on hundreds of billions of dollars of Chinese products in place.

His announcement, while seen as progress, drew some scepticism.

“I’m unsure that calling what was announced by President Trump an agreement is justified,” said Scott Kennedy, a China trade expert at the Center for Strategic and International Studies in Washington. “If they couldn’t agree on a text, that must mean they’re not done. Wishing an agreement does not one make. This isn’t a skinny deal. It’s an invisible one.”

No Meat on the Bones

There is so little meat on the bones, the meat is actually invisible.

We have been down this on-again, off-again negotiation path for well over a year now.

Circular Setup

  1. Trump announces progress
  2. Trump demands more and more
  3. China walks away
  4. Stock market sinks
  5. Trump goes back to the table with the same tactics hoping for a different result

Desperation Sinks In

All the while Trump has insisted on comprehensive deal.

Despite the lack of meat on the bones, we have finally made progress of sorts.

Trump (at least today) seems willing to settle for less than a comprehensive deal.

We are now on phase 1.

Hooray! Phase 1 might be easier, especially since it's undefined.

Unfortunately, it's a mystery how many phases will be necessary.

Mike "Mish" Shedlock

Comments (41)
No. 1-20
Harry-Ireland
Harry-Ireland

I have something to say about this, but Country Bob says I should STFU, since I'm a European douchebag.

Webej
Webej

Trade wars are easy to win, especially against little weaklings like Vietnamese or Chinese. Just threaten and roar, and they scatter and prostrate themselves.

ksdude69
ksdude69

Algo juice

Realist
Realist

I think you summed it up nicely Mish. We have heard this all so many times from Trump that it is very difficult to take it seriously.

I wonder how many days before he starts tweeting more threats at China and blows up Phase 1?

And I wonder when he is actually going to sign that wonderful NAFTA deal that will help US farmers and businesses so immensely. If I was a US farmer, I’d be getting pretty tired of all this waiting.

CzarChasm-Reigns
CzarChasm-Reigns

For those with smaller attention spans... it's Donald J. Trump's pamphlet: "The Start of the Deal".

Greggg
Greggg

Is it too late for the farmers? Maybe they have lost their farms to debt and Big agriculture has already harvested the farmers.

lol
lol

Trump taking a play from the Obama playbook ie master the art of bs and pretending.both these dudes have an amazing ability to make nothing look like something,and since Barak was able to get reelected after 4 years of (other than runnin up huge dept) literally accomplishing nothing, Trump believes that secret sauce ie non stop bs is the way to a 2nd term?

Casual_Observer
Casual_Observer

Trump is a gigantic blowhard on most things. It is literally full of sound and fury signifying nothing. If he makes it to summer of 2020 he may be in the clear but I suspect by the end of the year even Republicants in the Senate will turn on him.

Casual_Observer
Casual_Observer

By the way I think the real reason why trump is now coming to the table is that the repo market is due to china walking away from treasuries until they can get a favorable deal. The Fed cant hold off a liquidity crisis forever and bought Trump a few months to get the trade issues resolved. There is literally no sound explanation I've read for the Fed intervening in the treasury market like its 2008 again. Something is amiss there and no one has asked the right questions.

Casual_Observer
Casual_Observer

Also Mish and others are missing the geopolitical story. Trump is ceding to Russia in Syria and elsewhere and pulling back from traditional allies but also may now be ceding to China on trade. In the end the Rand Paul wing of the Republican party may get what they want which is isolationism. Russia is probably planning their next invasion into the Ukraine and Syria. Trump may look the other way on Hong Kong and Taiwan and economically the US will be back to 1.5% growth while losing geopolotically. The winner in 2020 may realize that he or she was better off not having won.

Realist
Realist

Trump is showing himself to be incredibly inept on the trade front.

There was a concerted effort by a (bakers) dozen countries to get together and counter China economically in Asia. Spearheaded by the US, it was a way to put pressure on China from a 13-nation trading block, which would lower tariffs and trade restrictions within the block to the betterment of those nations, while simultaneously putting pressure on China to clean up its act.

It was called the Trans Pacific Partnership or TPP. Trump pulled the rug out from his trade allies on this one. So the remaining countries went ahead on their own and lowered tariffs and trade barriers between the countries in the TPP.

Now, Trump is on the outside looking in. He is trying to strike a deal with Japan now (a TPP member) that he could have had a year ago if he hadn’t screwed these countries.

He also would have had better access to Canada under TPP than he negotiated in the new, and still unsigned NAFTA. How ironic, that he couldn’t even negotiate to get what was already on offer from his northern neighbour!

In the meantime, he is only going backwards on China. And he still doesn’t have better access to those 12 countries that signed TPP. In addition, his confrontational strategy is threatening trade with Europe and virtually every other US trading partner.

Meanwhile his supporters lap up his statements like “It’s easy to win trade deals”. Three years in, and still nothing! Pathetic.

Herkie
Herkie

Forget about corporate profits for just a minute, Turkey has killed American soldiers in Syria. If true, if there is one dead American who died of Turkish fire then all bets are off, it makes the trade war and Brexit combined look like nothing. It changes everything.

First Trump has to go, as a clear and present danger. Wipe out all republicans who control what is going on. President Pelosi can deal with it. And, If one American GI has died then woe be to conservatives no matter where they be.

Zardoz
Zardoz

Another nothingburger from the orange rat king of lies. He’s wasted his power on entitled idiocy, and now all China has to do is wait for his removal from office. The soybean farmers are waiting a bit more anxiously.... the longer they wait, the less of that market they’ll get back.

Six000mileyear
Six000mileyear

Trump's trade war has a similar quality to the Cold War. The US "won" the Cold War by getting the Soviets to overspend on military equipment. One advantage Trump's position has is Chinese companies are heavily in long term debt used to finance operations of short trend global consumerism. Similarly, Chinese workers have a lot of debt from buying overpriced real-estate. The advantage the US has is it can rebuild its manufacturing sector, but China will have a more difficult time building a service or consumer sector due to present levels of debt. China would have riots worse than HongKong once factory layoffs reach a certain level.

Realist
Realist

Hi Six000mile.

The Cold War, as measured by some historians was 45 years long (1946-1991). In comparison, I think Trump’s attention span is measured in minutes, or whatever just interrupted his train of thought (Squirrel!).

If Trump’s strategy (I sincerely doubt he has one) is to win by suffering less pain than the Chinese over a 45 year time frame, than that is a losing strategy to begin with. Farmers and Businesses can’t be waiting 45 years for results. Farmers and Businesses are already going bankrupt with the current trade skirmish (heck it isn’t even a war yet).

Plus, why should the US suffer most of the consequences alone in order to put China in its place? Had Trump remained in TPP, it would have been 13 countries facing off against China. And if he wasn’t pissing off Europe, India and a whole host of other trading partners, perhaps he could have united the entire world to get China to behave better. After getting concessions from China, he could have then turned his attention elsewhere.

Instead, with his scattergun approach, attacking everyone at the same time, all he has accomplished is pain and suffering for interests in on all sides.

Kimo
Kimo

Tough to watch sausage being made. I don't know much about Trump's negotiating style, and keep in mind this is Navarro's swan song, he is very knowledgeable on China's weaknesses.

njbr
njbr

Has anyone parsed out the particulars of the $50 billion in agriculture sales to China that was mooted, when $ 18 billion in 2017 was the previous record ? Just BSing? Or now playing in the commodity markets with the kids? Who comes up with this crap?

Sechel
Sechel

Nothing I heard addresses the theft of intellectual capital issue. the true core issue that Trump was right to bring up. Trump took a deal he frankly could have had months ago with the Chinese willing to up their agricultural purchases which was always in their interest.

Quenda
Quenda

Given the title of this thread (Trump's No Meat on the Bones Trade Announcement With China) and the African swine flu epidemic decimating Chinese pig farms maybe its time for the US to drive for a deal on pork -- before everyone else gets their foot in the door.