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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.

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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