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Home / US Business / Trump promised to win the trade war with China. He failed

Trump promised to win the trade war with China. He failed

But when the president sets his case for another term before the November election, he does not have much to show for a bruise trade struggle that has been a cornerstone of his foreign policy.

The recovery in the overall deficit is likely to have less to do with US and China conditions than it does with the coronavirus pandemic, which halted foreign trade as countries shut down their economies. spotted with Beijing despite experts claiming that it alone is not necessarily negative for the economy. Even before the pandemic hit, the gap between exports and imports was still higher than when he took office.

It also does not help the United States that China has achieved relative economic success this year: The country's exports and imports have risen sharply as the economy reopens. And while trade has turned off the pandemic, China's surplus with the United States was around $ 31
billion in September, according to Chinese customs data. The trade war also caused initial pain for American farmers, although a recent rise in soybean sales has begun to pull some of the sting.

"The point is that the tariffs caused a lot of security damage in the United States and did not reach the intended targets," said William Reinsch, a trade expert at the Center for Strategic and International Studies (CSIS) who served for 15 years as president of the National Foreign Trade Council.

A deviated agreement

Trump started 2020 with a partial trade agreement between the United States and China: The two countries agreed to reduce some tariffs and allow Beijing to avoid additional taxes of almost 160 billion dollars of the country's goods. China also agreed to buy $ 200 billion worth of US products over the next few years.
That was before the pandemic lifted the global economy. In August, China was in the process of buying less than half of what it had agreed to, according to an analysis by the Peterson Institute for International Economics. And while White House Chief Financial Officer Larry Kudlow said that month that trade relations with Beijing were "okay," it appears that talks to return to the temporary ceasefire and remove future agreements have been postponed indefinitely. .
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"The case for Trump's failure is clear, Reinsch said. can see it in his lack of progress in the so-called "structural issues" that were initially the basis for [the administration’s] actions. "

The two superpowers have not yet fully addressed any of Washington's biggest complaints about Beijing, Reinsch said, including its favoritism for state activity and Trump's accusation that the country is stealing American technology. (Chinese officials have repeatedly denied such allegations, claiming that technical secrets passed on were part of mutually agreed-upon agreements.)

"These questions were all subjected to phase 2 of the negotiations, which never started and now seem unlikely to begin, "Reinsch added.

Trump praised the" phase one "agreement when he signed it in January, telling reporters that the two countries "corrected past mistakes and delivered a future of economic justice and security. for American workers, farmers and families. "
Since then, Trump has reiterated that the agreement" does very well ", although Washington has pushed Beijing on other fronts, tightened the screw on technology companies such as Huawei and TikTok and threatened further sanctions.
" [Joe] Biden spent his entire career letting China steal our jobs and raid our factories, "Trump said during a campaign rally in Florida last week, referring to the Democratic presidential candidate." And let me tell you something: If he ever wins, will China own the US, OK? They want to own it. "

Meanwhile, China emerges from the pandemic as one of the only major countries that is apparently safe. The economy expanded by 4.9% last year compared to 2019 when it brought Covid -19 under control, a second quarter in growth.The International Monetary Fund expects China's economy to grow by 1.9% this year, compared to significant contractions in the US and Europe.The IMF projects China will be the only major economy expanding in 2020.
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And even escalating tensions with Washington have not put outside US companies from trying In addition to China's strong recent trade figures, US foreign direct investment in China actually increased by 6% in the first six months of 2020 from the year before, and China has just raised $ 6 billion in an international bond sale aimed directly at US investors for the first time in more than a decade.

But the trade dispute is likely to have some lasting consequences for China, according to analysts at JP Morgan.

"Uncertainty arising from the collision led to a redistribution of export capacity away from China, led by third-party producers," they wrote in a report last week. Analysts said the global pandemic shock has helped China maintain some of the production it would otherwise have lost this year, but that it will eventually be a "more regionally diversified supply chain, as other Asian countries offer attractive alternative locations."

Looking past November

As the progress of trade relations between the United States and China disappears, tensions between the two countries have increased in other areas as they blame each other for starting and abusing the coronavirus pandemic and clashes over Hong Kong and alleged human rights violations in Xinjiang. Washington has targeted TikTok owner ByteDance and has forced Huawei to fight for survival.
What Trump has succeeded in is changing the way Washington talks about China. The idea that there is a need for a more aggressive approach has now attracted bipartisan support, for the most part, as legislators consider all aspects of the relationship with more scrutiny.
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"The development of the US-China conflict after the election is likely to vary across a number of dimensions "including trade, technology and finance," wrote JP Morgan analysts, who suspect that tensions will continue even if Biden wins the election.

In this scenario, analysts said they expect relations between Washington and Beijing to continue to split as the two countries battle for 5G networks, quantum computing, artificial intelligence and biotechnology.

"In the struggle for dominance in these areas, the United States and China have committed disconnection, reduced cooperation, restriction of technology sharing, even closing … trade in some cases," they wrote.

Reinsch of CSIS sees a similar future, adding that Trump and Biden would probably both be forced to pursue policies that encourage decoupling, albeit with their own form of government.

"The reality is that the Chinese are not going to meet our demands, not because they are bad economics – they are not – but because they are bad politics," he said. "They would undermine [Chinese Communist] the party's control, which is the last CCP will ever accept."

– Anneken Tappe contributed to this report.

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