As I predicted at the outset, the “Phase 1” trade deal with China, formalized by President Trump and Chinese dictator Xi in early January, is proving to be a total waste of time in the push toward achieving a balance of trade with China. Once again in April, as it has done every month so far, China has not only failed to live up to its promises to increase imports of American goods, it hasn’t even met the baseline of matching its 2017 imports of U.S. goods. Here’s the table I created to track their progress, updated through April (the most recent data available): Phase 1 China Trade Deal 2020 YTD. Their imports were up very slightly in April, but are still well short of even the 2017 baseline.
What are working well are the tariffs on Chinese imports which Trump was smart enough to leave in place until China demonstrated its sincerity in abiding by the “Phase 1” trade deal. Imports from China remain approximately 40% below their 2018 level. Through the first third of 2020, the trade deficit with China is on track to fall to its lowest level in ten years. Had Trump not implemented the “Phase 1” deal and instead had enacted across-the-board tariffs on all Chinese imports, as he was on the verge of doing before signing the deal, we may very well have been on track to wipe out the deficit with China altogether.
Trade deals don’t work. Tariffs do. We have no control over exports because we have no control over what other countries are willing to buy from us. But tariffs give us total control over imports – what we buy from them. Trade policy should be the simplest policy that any president deals with, yet every one of them makes it as complicated as possible. We make the same mistakes over and over and American workers pay the price. It makes me sick.