Wow, Things Sure Were Busy on the Trade Front This Weekend

By Elizabeth Brotherton-Bunch
Aug 26 2019 |
President Trump and Japanese Prime Minister Shinzo Abe announce a tentative trade agreement between their two countries during the G7 Summit in France. | Photo by White House

An actual deal was announced during the G7! Well, probably.

Whew. A lot went down over the weekend.

Andrew Luck retired from the NFL. Former Rep. Joe Walsh announced he’s running for the Republican nomination. Toy company Hasbro confirmed it is buying the company that owns Peppa Pig and, oddly enough, also Death Row Records?

But all of that pales in comparison to what’s been happening over in France.

If you decided to enjoy one of the last weekends of the summer instead of paying attention to the news – or God help you, checking social media – we’ll catch you up.

France is hosting the 2019 G7 Summit, the annual gathering where the world’s top democratic economic powers talk about the big issues of the day.

While China isn’t technically at the summit, China is everywhere at the summit.

In some ways, things are going about how you’d probably expect, in that President Trump seems to be not getting along with anybody when it comes to trade (or frankly, any number of issues). Given how high the stakes are when it comes to China, it seems like it would be wise for Trump and the other G7 leaders to rally together to figure out how to confront China’s aggression.

Spoiler alert: That ain’t happening.

But there are some big headlines coming out of the summit that could shape global trade in the coming months. Like…

Headline No. 1: The U.S. and Japan Announced a Trade Deal “in Principle”

The “in principle” part is key, since the deal still needs to be signed. But it looks like the two allies have reached the general framework for a trade agreement that will see Japan buy more agricultural products from the United States. Trump quickly labeled the deal “tremendous for the farmers,” a clear reference to the U.S. agricultural sector, which has felt the impacts of the ongoing U.S.-China trade dispute.

U.S. Trade Representative Robert Lighthizer told reporters that some industrial tariffs will also be reduced – although a 2.5 percent auto tariff, always a point of contention between the two nations, will remain in place. But if the deal is finalized, Trump also will not be able to impose a 25 percent tariff on Japanese vehicles and auto parts, which he has threatened in the past.

Headline No. 2: Trump Regrets Raising Tariffs on China… But Wait, He Actually Doesn’t?

In one of the more confusing moments from the G7, Trump said he has “second thoughts” about the state of the U.S.-China trade war.

A little background first. The U.S. raised tariffs on Chinese imports on Friday in response to China raising tariffs. Trump also on Friday tweeted that American companies are “hereby ordered” to cut business ties to China, threatening to use an obscure law to enforce his demand. Aides downplayed the whole thing.

ANYWAY, after Trump made his “second thoughts” remark at the G7, everybody jumped on it as evidence the president doesn’t actually have a plan when it comes to dealing with China. So the White House clarified that Trump meant that he regrets not raising the tariffs on China even higher. Or something, I don’t know, it’s hard to keep up. I mean, Larry Kudlow said that Trump just misheard the question.

But wait, there’s more! On Monday morning, Trump announced that Chinese leaders had called him and requested a meeting. “They want to make a deal,” Trump said.

But wait again! After that, the Chinese foreign minister said he didn’t know anything about such a phone call.

Headline No. 3: Nobody Really Knows What’s Happening With Brexit!

Hey, here’s a headline that isn’t directly about the United States!

The United Kingdom (U.K.) is still trying to figure out how to exactly to Brexit and leave the European Union (E.U.). The U.K. struck a deal with the E.U. in November 2018, but U.K. lawmakers rejected it three times, so the whole process is stuck, and an Oct. 31 deadline is looming.

It’s now possible that the U.K. will leave the E.U. without reaching a deal first, which could lead to a bunch of weird things happening.

With British Prime Minister Boris Johnson at the G7 alongside a number of leading E.U. leaders, it seems like the gathering is a good time to talk Brexit. But things are going about as well as everything else at the summit.

Johnson described the chances of reaching a Brexit deal are “touch and go” and said the U.K. must be ready to leave the E.U. without a deal in place.

But wait! You didn’t think we’d get through this without Trump entering the picture, did you?

Trump told reporters that the U.S. and the U.K. will put together “a very big trade deal” after Brexit. Johnson, for his part, made a point to say that the U.K. is “in favor of trade peace on the whole” when it comes to the U.S.-China trade war.

Anyway, the G7 is technically still going on, so we’ll keep you updated on whether any big agreements are reached