China stiffed US on Trump Phase 1 trade agreement, failed to buy extra $200B in exports
The study cited the pandemic and Trump's trade war as major impacts
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China failed to increase its purchase U.S. goods despite an agreement with President Trump to grab an additional $200 billion of U.S. exports, a new study found.
Trump signed a "historic" deal with China in January 2020 which would see Beijing increase its imports by Dec. 31, 2021. A study from the Peterson Institute for International Economics examined the "Phase 1" agreement, which dictated that China would buy at least $227.9 billion of U.S. goods in 2020 and $274.5 billion in 2021, but the company hit only $288.8 billion over the two-year period instead.
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China only achieved 57% of its promised purchases, which left it short of even its pre-pandemic levels and means China did not increase its imports from the U.S. at all. U.S. officials promised to continue pressing China to show "serious intent" to reach their purchase commitments but admitted the deal offered little leverage for enforcement, Reuters reported.
Custom officials check documents with a man at a container port in Yantai in eastern China's Shandong province on Tuesday. | Associated Press
The study pointed to the COVID-19 pandemic as a significant stumbling block for China to hit the target sum, but also highlighted that the trade war Trump instigated prior to the deal left U.S. exporters to play catch up in the first place. The crash of two Boeing planes also dampened the ability to ship out new planes, and tariffs from China pushed automakers to move production out of the U.S. in order to maintain access to consumers, wrote the study’s author Chad Brown.
Walter Lohman, Director of the Asian Studies Center at the Heritage Foundation, told FOX Business that the deal was doomed to failure from the start, but not for the reasons that Brown cited.
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"The idea of locking China into certain quotas … I think it was a flawed concept to begin with," Lohman said. "It just wasn’t the way to go about things."
Lohman explained that the trade relationship between the two countries, despite some noise made by leaders, has remained "pretty strong." China remains among America’s top three trading partners with roughly equal shares to Mexico and Canada, and sales from American companies with subsidiaries in China sell almost twice as much as America generally exports to the country.
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Lohman argued that the deal set out to fix Chinese theft of American intellectual property (IP), but it was a poor way to handle the situation. China initially agreed to the deal because they were trying "wait the Trump administration out," but it was "never likely" to meet the agreed upon targets.
"The companies have often given away their property as the cost of doing business," he said. "It’s basically illegal in international trade law to demand someone gives you their intellectual property as a cost of business, but the Chinese do it, and the companies do it."
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"Some of the companies even offer it up to favor the Chinese, and then the market doesn’t work out for them, and then years later they complain about their technology being coerced away from them," he added, noting that as long as it doesn’t impact U.S. national security, that’s a problem for the companies to deal with.