FAST FIVE: A $50 Billion Hole Emerges In Trump's China Trade Deal
What's more, while the remaining tariffs provide leverage for US trade negotiators, they are still a tax on US importers and US consumers of Chinese goods.” But before we even get there, going back to the chart shown above, Bloomberg today points out something we have pointed out in the past, namely that China's $200 billion, two-year spending spree negotiated with the Trump administration appears increasingly difficult to deliver, and now a $50 billion “hole” appears to have opened up: that is the amount of US exports annually left out and many American businesses still uncertain about just what the expectations are.
The administration has said those new exports in manufactured goods, energy, farm shipments and services will come over two years on top of the $130 billion in goods and $57.6 billion in services that the US sent to China in 2017 — the year before the trade war started and exports were hit by Beijing's retaliatory measures to President Donald Trump's tariffs.
Here, the math gets even more ridiculous: The target for the first year that the deal takes effect is to add $63.9 billion in manufactured goods, agriculture and energy exports.
Importantly for China, the deal requires those purchases to be “made at market prices based on commercial considerations,” a caveat which spooked commodities traders, and led to a sharp drop in ags in the day following the deal's announcement.
That's not all: as Allen said, among the outstanding questions was whether China would lift its retaliatory duties on American products as the US keeps its tariffs on some $360 billion in imports from China as Trump seeks to maintain leverage for a second phase of negotiations.