Conservative Zone – Trade with China. It was big during the campaigns, and it remains an important issue. Trump has finally had the chance to take official steps on that path, and the first results look good.
While juggling an entrenched battle for healthcare, federal budgeting, tax reform and heightened tensions in the Middle East and North Korea, Trump has still found the time and resources to take on China. Trade negotiations are fully under way, so let’s see what they look like and how they will affect you.
The Visit
In early April, China’s President Xi Jinping visited Trump in Florida. It was the first chance for the two to have a real discussion about trade and other issues between the two countries, and it went well. While the single visit wasn’t sufficient to bring dramatic resolution to trade issues, there were open discussions of grievances and goals, and both presidents signed a resolution to have a new trade agreement in 100 days.
Once again, Trump overwhelmingly shuts down his critics. While they screamed of devastating trade wars and complete economic ruin, the president once again showed grace in leadership and garnered fast momentum towards progress. Another of his primary campaign goals is seeing positive action within Trump’s first quarter.
Expectations
In the grand scheme of trade agreements, 100 days is a short window. Because of the time frame, you shouldn’t expect to see sweeping reform that completely reshapes the trade landscape. Instead, you can look for a number of small concessions that will be wins for Trump and the U.S., but won’t cause China to completely lose face.
Overall, the trade deficit with China won’t disappear from this 100-day agreement. Instead, we will chisel away at the deficit with small but important changes.
The specific concessions aren’t set in stone yet, but suspicions point towards a change in financial and investment policy in China. For years, U.S. investors have endured excessive risk at the hands of scams, fraud and protectionist policy. One big point to hope for is that China will commit to prosecuting instances of fraud and scam perpetrated against U.S. investors.
Lighter regulations and efforts from both countries to reduce double taxing imports and exports is another likely agreement. There is also talk of China lifting a few import bans, most notably U.S. beef. In all, these small changes protect the bulk of the status quo but open up opportunities on both sides to stimulate economic growth to the tune of billions of dollars.
Trade War
The other big takeaway from the visit is the climate of trade war. The civility that was on display and the range of discussion both point to a complete de-escalation of the most ambitious rhetoric that popped up on the campaign trail. While Trump is in no way abandoning his promises, he’s showing that he can get the job done without resorting to extreme tariffs.
Once again, he has utilized the art of the deal to set expectations way above his actual goals, and the concessions he gets are in line with his true aims from the start. This is yet another action that leaves Trump detractors grasping for ways to continue to demonize him. A trade war with China seemed like an easy win, and that now seems less likely than at any point under Obama’s rule.
Long-Term Outlook
The short-term trade talks are setting a positive stage for the future. If mutually beneficial concessions can improve trade between the country, it opens doors for more optimistic and aggressive negotiation down the road. Ultimately, this is all going as expected.
China’s economy is still in dire straits, and the best way for Xi Jinping to win back the favor of his people is to kick start his economy with American investment. That gives Trump all of the bargaining power, so you can expect him to levy that power to the benefit of America.
In the long game, if Trump can reduce the trade deficit by even 10 percent, that represents billions more money in our economy and the productivity jobs to go with it.
Trump still has a long road of hard work ahead of him, but on many fronts he his finding early and impactful success. At the end of the next 100 days, China just might be a good place to make some quick money.
Before you commit too hard, we’ll have to wait and see what the final draft looks like, but it is certainly promising. In his endeavor to make America great again, Trump just might save China along the way.
SF Source Conservative Zone April 2017