Following the Trump White House’s announcement of a “Phase 1” trade deal agreement with China, some in the financial media began to spread (yet again) the lie that China might be getting the better of the United States. This is simply not true on so many levels. In fact, President Trump has masterfully outmaneuvered China on every level and is poised to reshape the entire way the world negotiates trade in a way that will once again put American interests and American workers FIRST above all others.
Read on to learn more:
Brilliantly Played – President Trump and USTR Lighthizer Present “Phase One” U.S-China Trade Deal…
…China has agreed to a $40 billion agricultural purchase from the U.S. In exchange for that purchase President Trump will be maintaining the full 25 percent tariffs on approximately $250 billion of Chinese imports and reducing to 7.5 percent the tariffs on approximately $120 billion of Chinese imports (round two). [Those were 15% prior to reduction]
The net difference (dropping 15% to 7.5%) is around $9 billion in tariff relief. Additionally, the U.S. is “suspending” the December 15th tariffs pending compliance verification with the non-tariff issues and China pledges.
Beijing has agreed to allow U.S. banks access to their financial markets, reform their behavior on IP theft, stop the forced transfer of technology and, according to their *promises*, allow exclusive ownership of U.S. businesses within China. These are the non-tariff issues. However, these are *promises*, and Trump/Lighthizer are well aware Beijing lies as a competitive strategy. Hence, the tariff hammer remains.
Beijing has promised changes to intellectual property, technology transfer, agriculture, financial services, currency and foreign exchange. Additionally, Beijing has pledged a $40 billion agriculture purchase.
In exchange President Trump is willing to give up $9 billion in tariffs (15% lowered to 7.5%) and suspend further tariffs pending verification of the Beijing promises.
Economically in the deal, President Trump gains a net $40 billion for U.S. farmers; and gives up $9 billion in tariffs. From that point everything, including any other possible trade agreement (phase 2, 3 etc.), is contingent on Beijing complying with their promises.
SUMMARY: Tariffs and decoupling will continue; exactly as expected: