Even on the day the trade deal two years ago was inked, there was skepticism that China would live up to its pledge to spend $200 billion more on U.S. goods and services.
But a new study finds China didn’t even spend a dime more on U.S. products.
Chad Bown of the Peterson Institute for International Economics examined the phase-one agreement inked during the administration of former President Donald Trump.
China agreed to buy at least $227.9 billion of US exports in 2020 and $274.5 billion in 2021, for a total of $502.4 billion over the two years, he noted. In reality: U.S. exports of covered goods and services to China over the two years were $288.8 billion.
There were many reasons for its failure. The trade war that preceded the trade pact, finalized in Jan. 2020, meant that U.S. goods exporters started from a hole, Bown said.
Another reason for the failure was the fatal crash of two Boeing
BA,
jets, that led the U.S. airplane to maker to halt 737 Max production and led China to cancel orders.
The pandemic was another big factor, as it slammed services exports, as well as travel and education. Financial services exports and charges for intellectual property were down slightly in 2020, though Bown said they may improve over the longer term.
U.S. agricultural exports, which were politically significant, did recover from the trade war but also fell shy of phase one commitments, Bown said.
Bown said the deal wasn’t a total washout. “The deal did halt his spiraling trade war. And several of its elements should be kept, notably China’s commitments to remove technical barriers to U.S. farm exports, respect intellectual property, and open up its financial services sector,” he said. But the main lesson of the phase one agreement, according to Bown, was that different terms for the trade relationship are still needed.
Opinion: Trump negotiated a bad trade deal that Biden perplexingly continues
This post was originally published on Market Watch
