…..The Penalty Tariffs set for December 15th will not be charged because of the fact that we made the deal. We will begin negotiations on the Phase Two Deal immediately, rather than waiting until after the 2020 Election. This is an amazing deal for all. Thank you!
— Donald J. Trump (@realDonaldTrump) December 13, 2019
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
No Mystery Here
Is everyone prepared for 11 months of “nearly there” on phase 2 of China deal.https://t.co/63uqsnques
— Mike “Mish” Shedlock (@MishGEA) December 14, 2019
Mike “Mish” Shedlock
That’s just great. A bogus trade deal. Trump has already made our passports worthless. No one will let us in because of our out-of-control pandemic. Soon our money will be worthless too. But not to worry. Zero interest rates will double Trump’s property values, so we can vacation domestically and pay European prices while staying at his hotels.
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.
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
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.
“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.
No details, no documents, no agreement on numbers, no signatures, no joint announcements.
Of course it’s the biggest deal ever.
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.
I think we all know what Q has to say, it’s yuge and bigly in addition to being an exemplary 4D chess move. Winning!
What’s in it for the Chinese? Do they really want Trump re-elected? I doubt it. They will drop a bomb on his election hopes at the right time.
So back to like it was before. DOW +400 on monday, on top of new highs from nothing but jawboning the entire time.
Everyone does seem to be very bullish at the top of the market.
I think this trade deal is a red herring. The liquidity crisis is more important.
Is this Trumps impeachment wag-the-dog moment? I’ll believe it when the deal is signed and the details come out.
“Trump’s Amazing Trade Deal: Details a Complete Mystery”
Kind of like a FISA court.
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
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.
“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 …
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.
actually USMCA is a real deal updating the old free trade agreement. Its not perfect but it does “improve” things that had been poorly drafted. But its very very far from perfect
What me worry? Fed policymakers see U.S. economy on good footing https://www.reuters.com/article/us-usa-fed-williams-idUSKBN1YH249
“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
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!
Ask you doctor to change the meds. What your on now clearly isn’t working anymore.