The global trade wars are still very much with us. Photo: Jens Büttner/dpa-Zentralbild/ZB (Photo by ... [+]
The headlines proclaimed great victories for both sides, the end to the chaos and a new day for both China and the United States.
One week later, as the reality starts to set in, the stories behind those headlines tell a very different tale.
Last week’s signing of what is being called Phase 1 of a trade deal between the two global trading powerhouses was a long time coming and prompted some sighs of relief on both sides that the worst of the nightmare was over. In fact, according to many informed observers and those trying to do business around the global commerce world, it was anything but.
Yes, the Trump administration announced it would roll back some existing tariffs and not institute another round scheduled to hit shortly. And yes, the Chinese said they would bump up their purchases of American goods, notably agricultural products, over the next two years.
But there were enough exceptions to the agreement and elements of the negotiations simply left out that the Trump trade war is still very much on. Areas like intellectual properties were not part of the deal, and any exodus of export-based manufacturing is migrating to elsewhere in Asia, not back to the U.S., one of the original goals of the Trump strategy.
“The deal does little to help American manufacturers in our industry,” Steve Lamar, president and CEO of the American Apparel & Footwear Association, said in a statement. “Not only does this deal leave in place tariffs on key imports of materials and machinery used to make clothing, footwear and textiles in the U.S., but it also allows China to keep in place huge retaliatory tariffs on American exports of cotton, hides, leather, textiles, shoes and clothing.”
Some farmers were equally negative. Farmers for Free Trade association spokesperson Michelle Erickson-Jones said: “This deal does not end retaliatory tariffs on American farm exports, makes American farmers increasingly reliant on Chinese state-controlled purchases and doesn’t address the big structural changes the trade war was predicated on achieving. The promises of lofty purchases are encouraging, but farmers like me will believe it when we see it.”
While applauding the initial steps, retailers, represented by the National Retail Federation, believed strongly there must be more to come. “NRF strongly supports the administration’s efforts to address China’s unfair trading practices, but we hope this is the first step toward eliminating all of the tariffs imposed over the past two years,” NRF president and CEO Matthew Shay said.
“The trade war won’t be over until all of these tariffs are gone. We are glad to see the Phase 1 deal signed, and resolution of Phase 2 can’t come soon enough.”
Many vendors who import products from China have lamented the uncertainties surrounding these trade deals, citing the difficulties in planning when they didn’t know what would happen next. With no timetable for when Phase 2 of the negotiations might take place, that uncertainty remained.
The president, in announcing the agreement last week, said we “will also see China greatly expand imports to the United States” while China steps up its investments in American manufacturing.
That remains to be seen, but for right now, those on the front lines of the trade war continue to hope for the best—but remain prepared for the worst.
