I'm sure this won't surprise anyone who has paid the least bit of attention here, but Trump's big deal with China looks like smoke and mirrors at the moment.
Several outlets reported yesterday afternoon that Trump would cut his existing tariffs in half as part of "phase one" of his "greatest and biggest deal ever," but we now know that only applies to tariffs he imposed a few months ago; it doesn't apply to tariffs he imposed in 2018.
Tariffs he imposed on $250 billion in Chinese goods -- the initial tariffs that pushed the manufacturing sector toward recession -- will remain as high as 25 percent.
The Office of the United States Trade Representative confirmed that the U.S. will be maintaining 25% tariffs on approximately $250 billion of Chinese imports while reducing tariffs on $120 billion in products to 7.5%. [...]
The USTR’s office added that the “Phase One” agreement struck between the U.S. and China also includes a commitment by Beijing to make “substantial” purchases of American goods in the coming years.
China’s Vice Minister of Agriculture and Rural Affairs Han Jun confirmed the country would increase its purchases of agricultural goods but declined to specify how much.
About that -- the New York Times reported this morning that Chinese officials have not agreed to buy a specific amount of American farm goods.
Some advisers to the White House said China had agreed to buy $50 billion worth of American farm products next year but China has so far not confirmed that figure and the United States trade representative did not provide an official figure in its statement. [...]
Chinese officials on Friday said that imports of American agriculture products would increase by a “considerable margin” to meet China’s needs for goods like soybean and pork.
In other words, China will purchase American farm goods based on consumer demand and market conditions just as they've long said they would.
So -- while some of Trump's tariffs will be reduced in size, all of his tariffs will remain on the books and China has not committed to buying a specific dollar amount of goods. We're more or less exactly where we were just after Trump declared a "truce" with Chinese President Xi Jinping in June of this year and, as you know, that truce lasted about a month before Trump blew it up and imposed the tariffs on $120 billion in goods; tariffs he's now cutting to 7.5 percent.
I expected Wall Street would light their hair of fire this morning, but the Dow Jones is actually down slightly at the moment I'm writing this. I don't know if the response has been muted because reality is settling in quicker than usual but, in any case, Trump probably won't be pleased that his marque deal isn't blowing anyone's mind.
Trump will not impose more tariffs on Sunday, but the rest of this "deal" has not actually been signed yet and probably won't be until sometime after the new year.