Watchdog: US-Chinese Agreement 'Does Nothing to Reduce Trade Deficit'

Posted May 23, 2018

The U.S. and China concluded two days of trade negotiations with an agreement not to impose tariffs on each other, while Beijing said it will buy more farm goods, energy and other products and services from U.S. companies. The ban is threatening to put the Chinese phone maker out of business.

Responding to statements by leading Democrat Charles Schumer that the US-China agreement did not mention the protection of intellectual property, Trump said in a tweet: "I ask Senator Chuck Schumer, why didn't President Obama and the Democrats do something about trade with China, including theft of intellectual property etc?"

US-CHINA TRADE: Treasury Secretary Steven Mnuchin said the United States postponed its proposal to raise tariffs on Chinese goods worth up to $150 billion.

On Tuesday, Trump said a resolution of the ZTE sanctions would also help USA companies that supply the Chinese firm: ZTE "can pay a big price without necessarily damaging all these American companies. you're talking about tremendous amounts of money and jobs to American companies".

In the Reuters article, a Morgan and Stanley economist estimated the agreement would bring $60-$90 billion more in exports during a period of years, but less than the $200 billion trade deficit deduction that President Trump initially demanded.

ZTE, hit by a seven-year ban in April which effectively crippled its operations, would gain a major reprieve after the world's two largest economies stepped back from the brink of a fully blown trade war following talks last week.

Early Monday the president tweeted that, in order to wind down an escalating trade feud between the two countries, China would buy more American products in order to reduce the trade deficit between the two nations.

Mnuchin, testifying before a U.S. Senate Appropriations subcommittee, said that any consideration of changes for ZTE "was not a quid-pro-quo or anything else" related to trade.

Neck-and-Neck       U.S. exports to the EU and Canada are nearly equal              Source US Census Bureau            
Neck-and-Neck U.S. exports to the EU and Canada are nearly equal Source US Census Bureau .cha

"The administration promised to fix the China problem".

Questions also remained over the administration's handling of ZTE.

President Donald Trump's surprising mission to rescue the Chinese telecommunications giant ZTE may be bearing fruit. For months, Trump railed against China to cut its trade surplus with the United States and threatened higher tariffs. The meeting between the United States and Chinese delegations agreed that China would increase its imports of United States agricultural and energy products. China counterpunched with tariffs on US products, rattling the market.

Stocks climbed sharply on Monday after the USA and China appeared to make major progress in trade talks. Negotiations are now behind closed doors, so it's unlikely we'll learn much more about this deal before it is settled.

Trump said May 13 on Twitter that he would seek to get ZTE back into business after discussing the issue with Xi.

Some analysts say that for now, Trump might have wanted mainly to smooth over relations with China before his planned June 12 meeting with North Korean leader Kim Jong Un. "The framework deal reported this weekend only makes it worse", Stumo said.

The official China Daily said everyone could heave a sigh of relief at the ratcheting down of the rhetoric, and cited China's chief negotiator, Vice Premier Liu He, as saying the talks had proved to be "positive, pragmatic, constructive and productive".

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