No One’s Hitting Their Commitments in the U.S-China “Phase 1” Trade Deal

By Matthew McMullan
Sep 02 2020 |
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Everybody’s got a lot more buying to do.

The Trump administration’s “Phase 1” trade deal with China has fallen out of the news recently. Political conventions, an ongoing pandemic that has put millions of Americans out of work, interesting and informative webinars that you should sign up for … there’s a lot going on!

But there wasn’t a lot to the deal with China to begin with. Despite a lot of harsh language and tall tariffs erected by both governments – most of which remain in place – it was ultimately meant to be a placeholder until the sides could come together for another round of negotiations. Justified or not, it’s hard to unilaterally extract concessions from a government that manages the world’s second largest economy.

As a result, Phase 1 was a pretty truncated deal. It included language on improved intellectual property protections in China, which will hinge on China actually enforcing them; language policing currency manipulation, but nothing that hasn’t been agreed to before; and hundreds of billions of dollars of purchasing commitments made by both sides.

And those purchasing commitments can be tracked. So … how’s everybody doin’?

The Peterson Institute Of International Economics is keeping a tracker handy. From its analysis:

Through July 2020, China’s year-to-date total imports of covered products from the United States were $48.5 billion, compared with a prorated year-to-date target of $100.7 billion. Over the same period, US exports to China of covered products were $39.3 billion, compared with a year-to-date target of $83.2 billion. Through the first seven months of 2020, China’s purchases of all covered products were thus only at 47 percent (US exports) or 48 percent (Chinese imports) of their year-to-date targets.

So… both sides are behind on their commitments. For a placeholder deal that our very own Scott Paul described as “completely inadequate.”

Last week, Trump administration officials and their Chinese counterparts held a phone call to review Phase 1, and both sides say they’re pleased so far. We’ll keep an eye on this deal as the year progresses.