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

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