Trump's China Trade Deal Looks Pretty Good, Actually

Daniel J. Ikenson

More clarity and more questions emerged over the weekend about the terms of the U.S.-China trade deal, which warrants an update to this preliminary assessment published on Friday.

The deal is pretty good for what is seems to accomplish. That may sound like fingernails on a chalkboard to those more interested in preventing Trump from gaining traction with claims that he won the trade war than they are interested in actually ending the trade war.

The deal is pretty good because it reduces business uncertainty, confirms that the administration realizes its approach was unsustainable, and—by formalizing terms to resolve the variety of issues that, frankly, distract attention from the most difficult problems in the relationship—creates needed space to shift focus to the genuinely challenging matters.

That, of course, refers to the challenge for technological preeminence and its attendant considerations: industrial policy; technology subsidies; development and proliferation of standards; related security issues; and the impact on this race for primacy on commercial and strategic outcomes.

So, what was agreed upon? In a nutshell, Washington agreed to cancel tariffs on about $160 billion of imports from China, which were scheduled to take effect yesterday; keep in place the 25 percent tariffs currently imposed on about $250 billion of Chinese goods (rather than increase them to 30 percent, as was scheduled); and reduce tariffs from 15 percent to 7.5 percent on about $110 billion of Chinese products.

Relative to what was looming (higher tariffs on all imports from China), these terms should be welcome news to most consumers, workers, businesses, and investors in the United States and China, and throughout the world. The specter of an escalating tariff war, with all the commercial uncertainty that portends, is no longer casting such a large shadow on the global economy. That’s good.

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