The United States and China must resume negotiations on important policies that are not affected by the first phase agreement. Trump`s trade war has failed to address what really concerns U.S.-China trade relations. It is time for a new approach. Soybeans are a good example of the anti-Trump reaction to trade policy. Before the trade war, they accounted for nearly 60% of U.S. agricultural exports to China. China did not choose soybeans for random retaliation. Eight of the top 10 soybean-producing countries voted for Trump in 2016, including many major Swing States.8 With our October 26, 2020 report, we seasonally adjusted monthly purchasing targets to reflect this month`s relative weight for these products in the 2017 trade data. Note that the monthly targets for the end of 2020 serve only to illustrate. There is nothing in the text of the agreement to indicate that China must achieve anything other than the end-of-year targets. The economic and trade agreement of the first phase addresses certain of China`s actions, policies and practices identified in the Section 301 study on technology transfer, intellectual property and innovation. The agreement begins to rebalance our trade relations and achieves sound and fully applicable commitments to solve structural problems. Not only does not rely on purchasing objectives address China`s problematic policy, which harms Americans, but it also helps to consolidate government planning, contrary to market results.
In particular, because China continues to impose discriminatory retaliatory duties on U.S. exporters, only its state-owned enterprises, not the Chinese private sector, will increase many purchases to meet their commitments, the opposite of what U.S. politicians say they want. The objectives of the agreement also send signals to America`s allies that the United States is primarily interested in China diverting imports from its suppliers, rather than attacking China`s problematic policies and undermining their confidence in U.S. policy. Overall, U.S. exports of manufactured goods to China did not grow well in 2020 (Chart 2). In September, exports were 17% below pre-trade levels. And compared to purchase commitments, the manufacturing sector was only 56% of the seasonally adjusted target for 2020. In his January 2020 trade deal with China, President Donald Trump argued for success in his trade war with China. In its self-proclaimed “historic” agreement, China committed to purchase other U.S.
goods and services in 2020 and 2021. Trump even boasted that the deal “could be closer to $300 billion once it`s done.” 2. On July 6, 2018, the Trump administration imposed its first tariffs on $34 billion worth of Chinese goods. China returned the favour at the same time. The two countries have imposed tariffs until September 2019, together covering more than $450 billion in bilateral trade. The January 2020 agreement applies to U.S. exports of goods and services. Because detailed data on high-frequency trade for services are not available, these commitments are not assessed here. Today, the world`s two most powerful economies have begun to re-establish a positive and mutually beneficial trading relationship.
On February 14, 2020, the economic and trade agreement between the United States of America and the People`s Republic of China came into force: Phase 1. China has agreed to increase the purchase of certain U.S. goods and services to a total of $200 billion in 2020 and 2021 compared to 2017. This PIIE graph tracks China`s monthly purchases of U.S. products covered by the agreement, based on data from Chinese Customs (Chinese imports) and the U.S. Census Bureau (U.S. exports). These purchases are then compared to the annual targets of the legal agreement, which are established monthly on the basis of seasonal adjustments on two basic scenarios (see methodolo