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Report: Trade War Pause Leaves Few Happy Trade War Pause Leaves Few Happy...
U.S. President Donald Trump’s mini-deal with China to keep the trade war from spiraling further bucked up stock markets and will likely defer another tariff escalation—but it will also disappoint nearly everyone, including both U.S. businesses and consumers forced to pay billions more for imported goods and China hawks in his own administration who hoped to use U.S. leverage to force real changes to China’s economic model.
While Trump said this week that he was after a comprehensive deal, many have long suspected he would settle for a tiny truce and call it a victory. He has long been at odds with his more hawkish trade advisors, especially Peter Navarro, who wanted to use the leverage of massive U.S. tariffs on Chinese exports to force Beijing to change its entire economic model, especially when it comes to industrial policy, subsidies, and intellectual property, and who also want to decouple the two biggest economies in the world. None of those long-standing, structural issues with China were addressed by the trade truce announced Friday.
Instead, Trump has managed to climb partway out of the hole he dug himself. Under the interim agreement, China said it will buy $40 billion to $50 billion worth of U.S. agricultural products. Before Trump took office, China was a huge and growing market for U.S. farmers, but the president’s trade war led to Chinese reprisals that hammered U.S. producers of soy, pork, and other agricultural products. The administration has paid out more than $28 billion in subsidies to farmers. In the meantime, other producers, especially Brazil, have gobbled up U.S. agricultural markets in China; the latest trade truce will at best partially undo that damage.
A partial trade deal focused on commodity trade with a U.S. promise to pause tariff hikes would amount to a “complete Chinese victory,” Benn Steil of the Council on Foreign Relations said earlier this week. “Soybeans and natural gas—that’s stuff they want, that’s not a concession. Why did we go through the past year of hell?”
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