The US and China have appeared to reach at least a tentative breakthrough on long-simmering trade tensions with the announcement of a preliminary deal to lower barriers. But many of the dangers of a possible trade fight still linger.
President Donald Trump and Treasury Secretary Steven Mnuchin on Monday touted the deal, which would pause recently announced tariffs on Chinese goods in exchange for China’s agreement to purchase more US agricultural and energy products.
But given the unpredictability of Trump’s trade positions and the tentative nature of the deal, experts say the trade fight with China could be far from over.
“If these things aren’t fixed, and we don’t get what we want, the president can always put tariffs back on,” Mnuchin said during a Monday appearance on CNBC.
The deal is drawing criticism from all sides
Leaders on both sides of the political aisle claimed Trump had backed off his tough talk on China by agreeing to the deal.
Democrats blasted the agreement for its lack of major reforms. Senate Minority Leader Chuck Schumer said the president needed to stay strong and “not sell out for a temporary purchase of goods.” Democratic Sen. Ron Wyden had even harsher words.
“After all the tough-guy rhetoric, the administration is simply getting rolled on trade with China,” Wyden said in a statement.
Members of the president’s own party also took issue with the direction of the negotiations. Some of Trump’s outside advisers on trade during the campaign, including former Nucor CEO Dan DiMicco and American Enterprise Institute scholar Derek Scissors, suggested the administration hadn’t secured enough in the negotiations.
Sen. Marco Rubio, a Republican from Florida, suggested China was “winning” the negotiations.
“Their concessions are things they planned to do anyways,” Rubio tweeted. “In exchange they get no tariffs, can keep stealing intellectual property & can keep blocking our companies while they invest in the U.S. without limits. #Losing.”
China sees the deal as a win
Chinese state media touted the developments as a win.
“Despite all the pressure, China didn’t ‘fold,’ as US President Donald Trump observed,” said the state-run China Daily in an editorial. “Instead, it stood firm and continually expressed its willingness to talk.”
Mei Xinyu, a researcher at the Chinese Ministry of Commerce, also told the government-sponsored People’s Daily that the Chinese did not back down on three key issues: adjusting imports to the US (rather than curtailing exports), declining to set a hard amount on trade deficit reduction, and continuing government support for growing industries.
The New York Times reported that Chinese social media users were comparing a photo featuring the Chinese delegation and US lawmakers to a photo from the negotiation of the Boxer Protocol in 1901.
That 1901 agreement has long been derided by the ruling Communist party as an example of previous Chinese leaders giving in to foreign powers. Social media users on sites like Weibo, however, noted how in this example, the Chinese delegation looked younger while the US lawmakers looked older.
“Over the past 100 years, American officials have gone from young to old, and Chinese officials have gone from old to young,” one Chinese Weibo user wrote, according to the Times. “”his has a lot to do with the current state of the two countries. America today is just as closed off as China was 100 years ago.”
Trump could reverse course after the North Korea summit
Trump on Monday praised China for its assistance in laying the groundwork for the president’s summit with Kim Jong Un of North Korea. And the summit’s success — or failure— could have repercussions for the US-China relationship.
Chris Krueger, a strategist at Cowen Washington Research Group, said the North Korean summit could decide whether the trade deal with China moves forward.
“So long as Singapore is pending, we do not believe these tariffs will be implemented,” Krueger said. “But once the summit ends, game on. In our opinion, as goes the summit, so go the tariffs.”
Trump’s inconsistent trade rhetoric is also a threat to the possible deal. So far, Trump has typically talked tough and then backed down — but there’s no reason to think that couldn’t work in reverse.
Stephen Moore, a conservative economist who advised Trump during the campaign, told Politico that Trump’s stance on the tariffs could flip if China doesn’t follow through on its end of the deal.
“If there is minimal progress, I do think Trump will impose tariffs on China,” Moore said. “It was a major campaign promise of his. And this is a guy who keeps his promises.”
US Trade Representative Robert Lighthizer, who is typically more hawkish when it comes to the US trade relationship with China, emphasized that tariffs were still on the table if China does not make substantial changes to its economy.
“As this process continues, the United States may use all of its legal tools to protect our technology through tariffs, investment restrictions and export regulations,” Lighthizer said. “Real structural change is necessary. Nothing less than the future of tens of millions of American jobs is at stake.”