China broke promise to import an extra $200 Billion from US
We are too addicted to China’s cheap stuff to hold Beijing accountable
On Jan.15, 2020, then-President Donald Trump announced a historic trade deal with Beijing that had two deadlines for increased imports, summing to $200 billion, from China.
Both deadlines passed after the election of Joe Biden, yet his administration has done nothing concrete in response. President Biden’s trade representative told Congress in a new report that the administration “is prepared” to do something, but Biden is actually letting Beijing slide.
That’s because China’s equivalent of crack cocaine for consumers feels so good—until it kills us. We love buying cheap stuff on Amazon. Corporations love the profits. Politicians do exactly what their voters and campaign contributors want. Everybody shoots up with the illusion that what feels good today, will be good for tomorrow.
Not so much, when China uses its profits to build a military and political influence machine capable of defeating America, democracy, and the market-based system on a global scale.
Trump tried to wake up our addicted economy with a bucket of cold water called tariffs, on $370 billion of Chinese imports. He wanted to put an end to the addiction, despite screaming protests of our corporations and their economists.
How Trump Used Tariffs to Get the $200 Billion Promise From China
Trump used the tariffs, and a credible threat for more, to extract a $200 billion promise from Beijing in January 2020. In exchange, he decreased some of the tariffs. The rest remain in place, even under Biden.
In addition to the $200 billion, Beijing agreed to structural measures against forced technology transfer, subsidies, and regulatory barriers, as well as protections for intellectual property, the liberalization of China’s financial services sector, and specific import targets for American agriculture, services, energy, and manufactured goods.
Trump’s flattery of Xi Jinping and alleged political sacrifices are par for the course in trade negotiations. He at the same time tried to pressure Xi by threatening to decouple entirely from the Chinese economy, and more specifically and immediately, to ban TikTok and WeChat, both of which are popular apps owned by Chinese companies.
How China Broke Its $200 Billion Promise
The deal gave Trump a public win leading into the elections of 2020, but China immediately started reneging on it, ultimately using the pandemic, the resulting global recession, lower commodity prices, disrupted supply chains, and the U.S. government’s “continuous sanctions and suppression towards Chinese entities” as excuses.
A mid-2020 survey of 100 companies doing business in China found that 13 percent had been asked to transfer technology compared to just 5 percent in 2019. The Trump deal was not going well, but he couldn’t emphasize it publicly, as he was knee-deep in an election.
By the end of the deal’s period of effect on Dec. 31, 2021, China had imported almost none of the extra $200 billion it promised, and only 52 percent of the promised services, 59 percent of the manufactures, 37 percent of the energy, and 83 percent of the agriculture targets.
While Beijing promised $227.9 billion of total imports by the end of 2020, it actually imported just $134.4 billion that year, well under the 2017 baseline of $151.2 billion. The promise of $274.5 billion of imports by the end of 2021 resulted in just $154.4 billion, barely above the static baseline, and arguably well below what the imports would have been without the tariffs.
Note that both of the deals’ deadlines expired after Biden was elected president. It was for his administration, not just Trump, to project the credibility of consequences, and then impose them, for Beijing not sticking to its promises.
Almost no progress was made by either the Trump or Biden administrations against China’s subsidies, which have for decades hollowed out America’s industrial ecosystem.