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Trump's "Historical Trade Deal" With China Final Results Are a Big Zero

The results of President Trump's historical trade deal with China are in. Chad P. Bown has the results in a series of Tweets.
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Chart courtesy of Peterson Institute for International Economics PIIE

Chart courtesy of Peterson Institute for International Economics PIIE

Key Comments by Bown

  • In January 2020, former President Donald Trump signed a trade deal that committed China to purchase an additional $200 billion of US exports over 2020-21. The data are now in. In the end, China bought none of that extra $200 billion.
  • Biden was not to blame, as China was never on pace.
  •  Two years of trade war meant first getting back to the (2017) baseline Trump's deal set, before chipping into that extra $200bn. They never got back to the baseline.
  • MANUFACTURING exports were the biggest part of the deal. US exports suffered during the trade war and did not recover. In the end, China bought only 59% of its full commitment of US manufactured exports in 2020–21.
  • China bought only 52% of its full commitment of US services exports in 2020–21.
  • AGRICULTURE was small economically (14% of exports) but big politically for Trump. US farm exports suffered in the trade war, received billions of dollars of subsidies from Trump, then recovered. China bought 83% of its commitment of US agricultural exports in 2020–21.
  • Q: Was Trump's trade war worth it for US exporters? A: The answer so far is "no."
  • Trump's trade war created problems for the American economy beyond its negative impact on US exporters.
  • As the 2020-21 period of purchase commitments comes to an end, the United States now seeks a new trade strategy with China. The world should learn the right lessons from the US experiences under the phase one agreement.

"Trade Wars are Good and Easy to Win"

Who can possibly forget that nonsensical Tweet by president Trump? 

Unfortunately, I failed to capture a screen shot and Twitter has suspended his account. 

However, we can review my March 2, 2008 comments when Trump made that Tweet: Trump Tweets "Trade Wars are Good and Easy to Win"

In one Tweet, Trump proves he understands neither trade math nor trading partner psychology.

A global trade war has begun. Trump fired the opening salvo. It's economic and mathematical madness.

Those who say trade wars are winnable aren't thinking, they're spouting nonsense.

Economic Madness

For a mathematical explanation of trade deficits, please see Trump's Tariffs Show He's "Clueless About Trade".

From 2018 on, I repeatedly bashed Trump for his trade wars with the world. 

Roots of the Problem

US Balance of Trade, chart by St. Louis Fed, annotations by Mish

US Balance of Trade, chart by St. Louis Fed, annotations by Mish

The roots of this problem date back to August 15, 1971.

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That is when Nixon closed the gold window, ending foreign redemption of dollars for gold.

At that point, politicians could run huge fiscal and trade deficits with seeming impunity. 

The final results of Trump's allegedly great deal with China are now in, and they are not pretty.

Trump lost the trade war with China and that likely hurt him in the 2020 election. Even farmers suffered for quite some time. 

For further discussion, please consider Disputing Trump’s NAFTA “Catastrophe” with Pictures: What’s the True Source of Trade Imbalances?

Unfortunately, President Biden is leaving most of Trump's trade war tariffs in place.

Biden also threatens Russia (and the EU indirectly) with more sanctions as discussed in Olympian Calm in Ukraine Over Russia Invasion Threat vs US Hype and Panic

No one ever seems to learn.

This post originated at MishTalk.Com

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