U.s.-China Trade Agreement Phase 1

Posted by | December 19, 2020 | Uncategorized | No Comments

The U.S. agricultural belt, with its excessive influence in U.S. policy, has been China`s most whistleblower target for Trump`s tariffs. Agricultural exports grew relatively well before the trade war, but suffered.6 Unlike hard-hit U.S. producers, U.S. farmers received tens of billions of dollars in federal subsidies in 2018, 2019 and 2020. Agriculture accounts for only 22% of the products covered by the purchase obligations, less than a third of the size of the manufacturing industry. Reading the trade agreement of nearly 100 parties between the U.S. and China sales of cars, trucks and similar parts in the United States fell to only 33 percent of the previous target. Before the trade war, China was the second largest export market for U.S. vehicles. In July 2018, China returned the favor against Trump`s tariffs with a 25% tariff on U.S. cars.

U.S. exports then fell by more than a third due to the relocation of production for Chinese consumers to other sites and the non-recovery of U.S. exports since then. Tesla, for example, announced in late 2018 that it would accelerate construction of a new plant in Shanghai and relocate U.S. production to Chinese consumers. The company stressed that Trump`s tariffs on auto parts and China`s retaliatory measures against finished cars had not made U.S. exports to China competitive. In response to this trade war policy, BMW relocated some of its production from South Carolina to China.5 At the same time, China imported more pork to cope with local shortages caused by the outbreak, allowing U.S. pork exports to exceed their 2020 target (see Chart 3).

In September, Chinese pork imports from the rest of the world also increased by more than 400% compared to 2017. And in one of the few parts of the first phase agreement, which includes political commitments (Chapter 3), China has agreed to remove technical barriers that had slowed pork imports. With respect to merchandise exports to the United States, the agreement is estimated to include $95.1 billion in goods, or 73% of total U.S. merchandise exports to China ($129.8 billion) in 2017. Of total exports of covered products in 2017, exports amounted to $20.9 billion for agriculture, $66.5 billion for manufacturing and $7.6 billion for energy. The products discovered by the agreement – and therefore without a 2020 target – accounted for 27% ($34.7 billion) of total U.S. goods exports to China in 2017.

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