- The Washington Times - Tuesday, January 14, 2020

The U.S. and China are set to sign a phase 1 trade agreement Wednesday at the White House, giving President Trump another election-year boost on the economy even as he prepares for his impeachment trial in the Senate.

Mr. Trump is scheduled to host a team of Chinese negotiators in a ceremony marking an official suspension of the tariff war that had been escalating between the two countries since 2018. China has agreed to increase its purchases of U.S. agricultural goods by roughly $16 billion per year, reaching a level of about $40 billion annually.

Beijing also is agreeing to increase overall imports from the U.S. by about $200 billion over two years, officials have said. That includes $75 billion more in U.S. manufactured goods, $50 billion more worth of U.S. energy and about $40 billion in services, Reuters reported.


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The agreement should ease concerns in farming states, which have been hit hard by Chinese tariffs and lost markets, prompting the federal government to issue nearly $30 billion in bailouts as compensation over the past two years.

At a campaign rally Tuesday night in Milwaukee, Mr. Trump praised the deal for “massively boosting exports of products made and produced right here in the great state of Wisconsin.” Wisconsin is a top producer of dairy products.



When Mr. Trump imposed tariffs on China, most economists said it would harm the U.S. economy by raising prices and inflation, essentially taxing U.S. consumers and businesses. But the U.S. economy has remained strong, with historically low unemployment, relatively low inflation and record-setting stock market performances.

Conservative economist Stephen Moore, an outside adviser to the White House, said the confrontation with China “has been a very positive thing for the economy” that should benefit Mr. Trump politically.

“It really sets up Trump for 2020,” he said.

Business leaders and economists have called the phase 1 deal modest and say one of the main causes for optimism is the halt to further tariff increases, although most tariffs will remain for now.

While the deal falls short of the comprehensive agreement that Mr. Trump had sought when he first confronted Beijing over unfair trade practices, it does include a promise by China to stop the forced transfer of technologies from U.S. companies doing business there. The U.S. also agreed to remove its label on China as a currency manipulator, a designation that could have led to more tariffs.

Senate Minority Leader Charles E. Schumer said he fears that Mr. Trump is taking “the easy way out” and settling for a weak deal because of the looming presidential election in November.

“For the past decade, China has stolen American intellectual property through forced technology transfers of our companies and through outright cybertheft,” Mr. Schumer said on the Senate floor. “The president’s phase 1 deal doesn’t even address this issue.”

Mr. Schumer, who formalized his complaints in a letter to Mr. Trump on Monday, said Mr. Trump gave away his main form of leverage by easing off tariffs for “vague promises of reform.”

Specifically, the Democratic leader fears the administration won’t be able to rein in Chinese subsidies that distort markets and undercut U.S. industries, or its use of state-owned enterprises hat get preferential government treatment.

He also said the agreement is a day late and a dollar short for the agricultural industry.

“American farmers have already lost billions and over the last two years, watched their markets disappear, and too many American farms have gone bankrupt in the time that it took President Trump to reach this deal,” Mr. Schumer said.

Mr. Trump on Tuesday said farmers are winning out under his administration. On top of the Chinese deal, he highlighted his rewrite of the 1994 North American trade deal as “a giant victory for workers and dairy producers.”

Senate leaders are trying to tee up a vote on the U.S.-Mexico-Canada deal before an impeachment trial on whether to remove Mr. Trump over his interactions with Ukraine.

“It just needs one more vote and we’ll get that out of the Republican Senate,” he said.

Alliance for American Manufacturing President Scott Paul told Mr. Trump in a letter Tuesday that the administration’s use of tariffs under Section 301 of the Trade Act of 1974 has “proven to be an effective and appropriate tool to trigger our negotiations with China.”

“For far too long, seemingly endless dialogue with China proved that polite requests to curtail its predatory, state-driven industrial policies do not yield meaningful results,” Mr. Paul said. “Left to its own devices, China has repeatedly demonstrated that it is unwilling to hold up its end of the bargain.”

Because of the initial agreement, Mr. Trump decided to wave off tariffs that would have hit nearly $160 billion in Chinese goods — including electronics and other popular items — on Dec. 15.

Existing tariffs on $250 billion in goods remain, while levies on another $110 billion will be reduced from 15% to 7.5% under the deal.

The U.S. will review Beijing’s compliance with the deal no sooner than 10 months after the signing to determine whether it’s worth easing those levies, according to Bloomberg, which cited people familiar with the parameters. The timeline likely would put off any relief until after the November elections.

White House economic adviser Larry Kudlow said the administration “got a lot of what we wanted” in the deal.

“We’ve never done this. This is history,” Mr. Kudlow said. “That’s the tough part. And that’s what we accomplished. And we will move on from there.”

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