Trade War Cease Fire

Presidents Trump and Xi have agree to a "90 day cease fire" on new tariffs. This means that Trump will not raise tariffs on Chinese imports that were scheduled to take effect on January 1st of next year. The tariffs will go into effect if the two countries cannot reach an agreement within that 90 day time frame.

Presidents Trump and Xi have agree to a “90 day cease fire” on new tariffs. This means that Trump will not raise tariffs on Chinese imports that were scheduled to take effect on January 1st of next year. The tariffs will go into effect if the two countries cannot reach an agreement within that 90 day time frame.

BUENOS AIRES, Argentina (AP) — The United States and China reached a 90-day ceasefire in a trade dispute that has rattled financial markets and threatened world economic growth. The breakthrough came after a dinner meeting Saturday between President Donald Trump and Chinese leader Xi Jinping at the Group of 20 summit in Buenos Aires.

Trump agreed to hold off on plans to raise tariffs Jan. 1 on $200 billion in Chinese goods. The Chinese agreed to buy a “not yet agreed upon, but very substantial amount of agricultural, energy, industrial” and other products from the United States to reduce America’s huge trade deficit with China, the White House said.

The truce buys time for the two countries to work out their differences in a dispute over Beijing’s aggressive drive to supplant US technological dominance.

In another long-sought concession to the US, China agreed to label fentanyl, the deadly synthetic opioid responsible for tens of thousands of American drug deaths annually, as a controlled substance.

While this is good news, it should also be pointed out that this could have all been avoided. China was already buying considerable amounts of agricultural products from the US. Just because the US runs a trade deficit with China does not mean the US exports nothing to China. An analogy would be getting excited that we are no longer going to be hitting ourselves with a roofing hammer. Sure it is a good idea to stop, but an even better idea would be not to hit yourself with the roofing hammer to begin with.

FILED UNDER: China, Donald Trump, Economics and Business, International Trade, Taxes
Steve Verdon
About Steve Verdon
Steve has a B.A. in Economics from the University of California, Los Angeles and attended graduate school at The George Washington University, leaving school shortly before staring work on his dissertation when his first child was born. He works in the energy industry and prior to that worked at the Bureau of Labor Statistics in the Division of Price Index and Number Research. He joined the staff at OTB in November 2004.

Comments

  1. Lounsbury says:

    So the existing tariffs remain in place. So 90 day clock will run. One rather doubts Trump’s administration, distracted and undermanned will be able to make real progress, but the news visibility will drop, which seems to be Trump’s major action driver.

    His farmer supporters would seem likely to continue to suffer as long as the existing tariffs he launched remain in place and China likely can play the longer game (as it is painfully evident his short-attention span and publicity sensitivity) until greater pressure builds for a climb-down.

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  2. Dave Huff says:

    Greatest President ever!

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  3. Kathy says:

    90 days? I don’t think either side will hold off that long.

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  4. Ben Wolf says:

    Underlying problem of corporate labor arbitrage will not be resolved by either tightening or easing of tariffs. Either way the Administration goes, social instability will increase, likely to the benefit of xenophobic Right.

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  5. Teve says:

    Why didn’t Trump criticize the Chinese for inventing the hoax of global warming?

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  6. Guarneri says:

    @Teve:

    He thought the enlightened French were doing a great job of celebrating fuel taxes to save the world. Except for the greenhouse gases being emitted by burning cars that is……..

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  7. grumpy realist says:
  8. Lounsbury says:

    @grumpy realist:
    While that would have all the well-studied results of say Brexit, as I understand it is not clearly a devolved power for a President to exit the Treaty by presidential fiat. One would hope that between the remain Free Trade oriented Republicans who maintain some semblance of adherence to rational economic policy and the Democrats who may merely what to fvck Trump over, that would be rapidly blocked.

    It certainly would be a pointless act of idiocy putting the US on a Brexit like route to self-harming cliff-edge exit.

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  9. Michael Reynolds says:

    @Guarneri:
    Yes, riots in France clearly prove that Trump is not a bumbling imbecile.

    Dumber and dumber, dude.

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  10. Michael Reynolds says:

    @Lounsbury:
    Trump is waiting to be paid. Surely the Chinese – not generally considered to be naive people – understand this. Give the orange clown a Trump Tower Shanghai and this whole trade thing goes away. Trump has been bought by the Russians and the Saudis and Emiratis, Xi just needs to find a way to slip Individual 1 some cash. Doesn’t even have to be subtle. He could just stuff bank notes in Trump’s pockets.

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  11. Sleeping Dog says:

    @Michael Reynolds:

    I’ve enjoyed the Trumpist commentary, like Guarneri, on the riots in France, painting Marcon as the bumbling socialist and the rioters as the oppressed citizenry suffering under the socialist boot of Marcon. While the truth is that Marcon is a neo-liberal who if we are to draw comparisons to the US, is much closer to Paul Ryan than Bernie Sanders.

    With regards to the oppressed French citizenry, while the issue at hand is the gas tax, the underlying resentment is a result of Marcon’s ongoing reform of the labor laws reducing worker protections and providing more flexibility to employers as well as the tax reduction to the wealthy implemented by François Hollande and rather than increase the deficit, Marcon has shifted the cost, hence the gas tax.

    Marcon was elected on his promise of reducing unemployment and growing the economy, unfortunately the voters didn’t pay enough attention how he planned to do that.

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  12. Tyrell says:

    This area used to be dominated by textiles and furniture. Then in the 1970’s they made these overseas trade deals and sold us out. Try to find a jacket with a “Made in the USA” label. A whole way of life, culture, and tradition disappeared: mill buildings closed and were torn down or converted to apartments. Some of these buildings dated from the 1800’s. The mill village disappeared. A family atmosphere and closeness was gone. Sad. There was a big push to “Buy American” but it did not help much.
    Mill workers did not make a lot – pay was good, but not great. The work was steady. A person could always get work at the mills – often hired on the spot. They took pride in their work and what they produced: quality furniture and clothing.
    People around here still hope for a return of those industries and mill life.

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  13. grumpy realist says:

    With the silliness in the U.K., I’ve gotten to the point where even an ardent Brexit-news-follower like me is just rolling her eyes. If you ever wanted to see an ostentatiously well-mannered country end up in chaos due to lack of planning and political bluffing, look no further.

    Part of the problem was that the original Brexit vote was really “stay in the E.U.” vs. “F**k you”. The latter vote was jumped upon by the ERG etc. who grabbed the ball and ran away with it hoping to gain political power. Then a whole bunch of people did analysis and pointed out that leaving the EU would not be easy, to which the retort was again “F**k you!” It’s now become a habit–anyone who points out problems with the departure or any data showing a downwards trend and the other side goes Librarian, accusing the data-provider of “Project Fear”, of “being paid off by Soros!”, or simply “not having a sufficiently optimistic mentality about the Brits.” I haven’t figured out whether the accusers really believe what they are saying, or they’re simply terrified that they really did go off the cliff and are loudly screaming in an attempt to bluff.

    (Want to know how WWI started? This is the modern equivalent. A whole bunch of countries, bluffing each other and convinced that if they just bluff enough the other side will back down. What the Brits haven’t learned is that the EU does not bluff and will walk away. Talk about a nation of toddlers….)

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  14. Matt says:
  15. Guarneri says:

    Poor, Mikey. What, just dumb, no claims of racism and homophobia? You are losing your touch.

    I think the French should consult deGrasee Tyson about fuel taxes and global warming. Except old Ty may have spent a little too mu

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  16. Guarneri says:

    Poor Mikey. Didn’t even understand the reference, but reflexively resorts to “dumb.” What, no racism or homophobia? Losing your touch?

    But you know, I think the Frenchies should consult with deGrassee Tyson on fuel taxes. Of course, Old Ty may have spent too much time studying black holes and not AGW. Just sayin’.

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  17. grumpy realist says:

    Very interesting article linking the mentality behind punk rock and Brexit.

    Stroppy kids rebelling against the adult EU, that’s all it was and ever will be. As said, a nation of daft “up yours” types. Unfortunately insufficient to actually run an economy, but I guess the idiots will have to learn the hard way.

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  18. william rabkin says:

    @Tyrell: “People around here still hope for a return of those industries and mill life.”

    And I hope for a 20 year-old Claudia Schiffer to show up at my door, pledge her undying love and hand me a check for a billion dollars. I don’t, however, count on this and I don’t plan my life around waiting for it to happen because I am not an idiot.

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  19. wr says:

    Not sure why I’m in moderation here…

    ReplyReply
  20. Tyrell says:

    @william rabkin: I would settle for just Claudia Schiffer.

    ReplyReply

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