Trump Signing of the “Wonderful and Unprecedented” Trade Agreement
Twenty months after launching a trade war with China over the weekend, the US president celebrated the signing of the “wonderful and unprecedented” trade agreement. But the numbers are vague, the big controversies rolled on and the financial markets didn’t buy the show.
Under the agreement, the US agreed to reduce tariffs on Chinese goods and to suspend new tariffs. The charges raised for currency manipulation.
Since the trade war broke out in March 2018, Trump has imposed $ 370 billion on Chinese goods. In response, China has imposed counterparts on US $ 110 billion worth of goods, including agricultural products, vehicles and spare parts, chemicals, whiskeys, cigars, clothing and television sets.
At the same time, the new agreement eliminates $ 156 billion worth of Chinese products, which were to come into effect today. These include cell phones, computer screens, laptops, watches, kitchen accessories, clothes, jewelry and toys. This is great news for Americans in the midst of Christmas shopping fever.
Without Trump canceling the new round of tariffs, the average US customs duty on Chinese produce would have climbed to almost 24%. This is a dramatically higher rate compared to the average of 3.1% that applied to these products before the trade dispute between the countries broke out.
“This is a wonderful agreement for everyone,” President Trump tweeted, minutes after the House Judiciary Committee approved two indictments against him as part of the impeachment process that is momentarily tangible. “The agreement with China covers a huge range of production, agriculture, a lot of laws, regulations,” he said later at a White House press conference. US Trade Representative Robert Leathiser said in an official statement that this is an “unprecedented” agreement that is testament to the president’s “strong leadership” and that the parties intend to sign the final draft in Washington next month.
— The White House (@WhiteHouse) December 13, 2019
But the cracks were quick to appear. Against the backdrop of Washington’s victory announcements, analysts pointed out that the agreement was vague and ambiguous and that neither state had released documents confirming the details. China, they said, was even dimmer than Washington. Accordingly, markets reacted in disbelief. Wall Street’s trading day began yesterday with slight declines, which turned slightly higher after China’s announcement of a trade agreement. However, later on, the indices almost returned to opening levels. The S&P 500 and Dow Jones recorded a minimal increase of less than 0.1% and Nasdaq climbed 0.2%.
Confusion was also recorded in Beijing, which mistakenly believed the US was holding a press conference in parallel to announce the agreement.