Trade data released by the Commerce Department on Thursday for the month of May reveals that China bumped up its imports from the U.S. slightly, but still fell far short of the goals of the “Phase 1 Trade Deal” signed with the U.S. in January. Here’s the data (source: USA Trade Online): Phase 1 China Trade Deal 2020 YTD.
This deal sets goals for Chinese imports of American goods for four different categories of products: manufactured products, energy products, agriculture products, and total products, using 2017 Chinese imports of these products as the baseline for increases. Through May, we’re now five months into this deal. That’s 20 opportunities to meet the monthly goal for each category of product. So far, China has not met one single goal. In fact, in May, for the first time, China exceeded the 2017 baseline for one category of product. They imported $1.249 billion in energy products vs. the 2017 baseline of $0.758 billion, but still fell short of the goal for May of $1.943 billion.
Year-to-date, China is behind its commitments by the following amounts:
- manufactured products – 25.7% below goal
- energy products – 69.6% below goal
- agriculture products – 60.6% below goal
- total goods – 35.9% below goal
This is pathetic. At this point, one can only conclude that, rather than trying to live up to the deal and boost its purchases of American goods, China is actually making a concerted effort to reduce its purchases.
In October of 2018, the monthly trade deficit with China hit a record of $43 billion. In May of this year, that deficit was down to $27 billion. But the “Phase 1 Trade Deal” gets no credit for that decrease. In December of 2019 – the last month before the deal was signed, the deficit with China was $24.8 billion. All of the drop in the trade deficit with China is thanks to the 25% tariffs that are in effect for half of all Chinese imports. The “Phase 1 Trade Deal” has had absolutely no impact on further reducing that deficit.
A huge part of the “Make America Great Again” promise was to reduce the trade deficit and bring manufacturing jobs back home. There has been virtually no progress. In May, the deficit in manufactured goods fell just $1 billion shy of the record deficit of $75.8 billion set in December, 2018. Trump has squandered his term with making fruitless deals. The deficit with Mexico is worse than ever, hitting a record in March. The progress made in reducing the deficit with China (through the implementation of tariffs) was offset by increases in other countries, most notably Vietnam and Mexico, and that progress ground to a halt with the signing of the “Phase 1 Trade Deal.” There’s been absolutely zero progress in reducing the deficit with the EU. To date, there hasn’t even been an attempt.
Trump needs to kill the “Phase 1” deal now and extend the tariffs across the board to all Chinese products to demonstrate that he’s still committed to the “MAGA” promise if he’s to have any hope of being re-elected. Far too much time has been wasted, but it’s not too late.