President Donald Trump was quick to tout the U.S.' verbal agreement with China on trade as a major win, especially for American farmers. But a deal isn't over the line, while experts say the pact falls well short of a breakthrough in altering trade relations with the Chinese government.
As part of a cease-fire deal announced Friday, China agreed to buy up to $50 billion in U.S. farm products, while the Trump administration said it would suspend a tariff increase on $250 billion worth of Chinese imports that was set to take effect Tuesday.
Optimistic goal for Chinese farm purchases
First, it may be too early for farmers to celebrate. The Trump administration said China has committed to buy $40 billion to $50 billion in soybeans and other U.S. agricultural products within two to three years.
But Arthur Kroeber of Gavekal Economics points out that Chinese imports of U.S. crops peaked at $29 billion a year in 2013 and have since declined to $10 billion annually. Translation: Just boosting China's purchases of farm products to their peak level six years ago would be a major achievement.
Second, it's hard to judge the significance of the deal until we see the details spelled out in writing, according to Neil Shearing, chief economist with Capital Economics. Chinese officials have framed the latest round of trade talks as progress, rather than an actual deal, he notes.
Notably, some of the thorniest issues — such as U.S. allegations that China forces foreign companies to hand over trade secrets — were dealt with only partially, or not at all, and will require further talks.
"The president is acting as if a lot of Chinese concessions have been nailed down, and they just haven't," said Derek Scissors, a China specialist at the conservative American Enterprise Institute.
Phase two is much taller task
The fact that the Trump administration described last week's deal as "phase one" of the agreement highlights the hard road ahead in coming to terms on more fundamental issues, such China's policies on intellectual property.
"As things stand there is no obvious path to a 'phase two' deal covering these broader concerns," Shearing said in a report.
Finally, Friday's deal doesn't end the trade conflict between the U.S. and China so much as call a truce. The Trump administration still has in place tariffs on more than $360 billion worth of Chinese imports, while Beijing has lashed back by taxing about $120 billion in U.S. goods.
Trump also has yet to drop plans to impose tariffs that are set to take effect Dec. 15 on an additional $160 billion in Chinese products — a move that would extend the sanctions to just about everything China ships to the U.S.