Art of the deal! Donald Trump agreed to pause most tariffs on China for 90 days in exchange for — drumroll — more talks. All this “winning.” It’s exhausting.
A joint statement from US and Chinese negotiators said Trump’s outlandish 145% levies will drop to just (or “just” with scare quotes) 30% by mid-week. China will lower the 125% retaliatory duties it placed on imports from the US to 10%.
The deescalation came on the heels of what both sides described as constructive talks in Geneva where, according to the US, “substantial progress” was made. Jamieson Greer indicated Sunday the two sides weren’t as far apart as initially feared, and Scott Bessent on Monday suggested, implausibly, that the US ultimately hopes to “pull what is our largest bilateral trade deficit into balance.”
I don’t see much use beating this particular dead horse, although the administration’s going to leave me no choice in the weeks and months ahead I’m sure. It’s not clear — at all — that eliminating America’s bilateral deficit with China, or any other emerging market for that matter, is a desirable outcome.
You can certainly make the case, as Bessent did, that it’d be nice for China to buy more US goods. But that’s something different from insisting on balanced trade in a literal sense of the word “balanced.” The market — i.e., supply and demand — will dictate there “should” be a bilateral deficit as long as Americans’ appetite for cheap consumer goods is insatiable.
You can find plenty of lower-income voters cheering Trump at rallies when he rails against China, but I don’t see too many people in Trump country throwing their red hat in the ring for a trade fight that entails swearing off anything made in China even if that means the cost of living goes up 30% or more.
During the 90-day pause, Chinese products will still be subjected to sectoral levies, Trump’s global “baseline” tariff of 10% and the country-specific duties he imposed during his first term which Greer on Monday said “have been effective in reducing the US bilateral trade deficit with China.”
I realize no one cares in a world where facts are persona non grata, but the veracity of that quote from Greer’s debatable. America’s goods trade deficit with China was $295 billion in 2024, 6% (almost) wider than 2023. As I understand it, that doesn’t count the goods imbalance from trade covered by the de minimis end-around.
I’m sure (I hope) Greer has a list of counterpoints, but as the simple chart makes clear, evidence in favor of the notion that US policy’s been “effective” at addressing imbalanced trade with China is so far wanting. If current policies were working in that regard, we wouldn’t be having this discussion.
China hasn’t come anywhere near meeting its commitments under the “phase one” trade deal Trump secured in 2019. Enforcement of that arrangement — which virtually no Trump voter could tell you the first thing about, by the way — was rendered impossible by the pandemic.
Expect Trump to be lampooned for this “pause” just like he was for the pause announced on April 9. Importers will now ramp up purchases of Chinese goods as a hedge against a scenario where the truce isn’t extended past 90 days. 90 days gets you to August. That’s uncomfortably close to Christmas if you’re a retailer. Better to get “stuff” while the gettin’s good.
That, in turn, raises the specter of wider US-China deficits as the negotiations proceed. Any sensible person would understand that’s not evidence of malice on China’s part, but rather of rational front-running on the part of importers. But Trump’s not a sensible person. He’s likely to be upset about wider deficits during the 90-day pause, which opens the door to a broken truce. (Recall that Trump famously triggered a bout of market volatility in August of 2019, when he abruptly called off a tariff ceasefire with Xi.)
It goes without saying that Trump comes away from the weekend discussions looking ridiculous for having lowered tariffs on China by — checks notes — 115ppt for exactly nothing in return. As I put it on Sunday, “China’s going to do exactly what they did to Trump during his first term: String him along.”
Trump didn’t even get a set of vague promises from Xi’s envoys. All he got was, to quote Monday’s joint statement, an agreement to “establish a mechanism to continue discussions about economic and trade relations.”
Art of the deal, folks. Are of the f-cking deal.
Two comments:
1. Americans don’t care about this- so long as they can continue to get cheap stuff from China. They generally do not care about “Made in America” if it costs more.
2. Even if tariffs are zero, if Xi tells the Chinese he will punish them if he finds out they are using an IPhone- then the Chinese won’t buy IPhones.
the emperor has no clothes, never had any but even fewer today…
Fox news will call this a breakthrough !
Financial nihilism at its best. No one has to believe anything but that Trump Inc will make the vol and then fix vol. “Better buy stocks!” It’s fiat diplomacy and as long as markets play along, the truth doesn’t matter. Until it does, and if you believe it or not, it will be Biden’s fault.
“It goes without saying that Trump comes away from the weekend discussions looking ridiculous for having lowered tariffs on China by — checks notes — 115ppt for exactly nothing in return.”
There are reports that some progress was made on the fentanyl issue. Part of the GOP two-part approach to reducing demand, along with cutting funding for addiction treatment centers.
On another note, does this mean that those deficit hawks will have to reduce their estimates of revenues from import taxes? Which must be offset by further cuts elsewhere to get the tax cuts approved?
I do enjoy how he negotiates against himself. I am listening to him now rambling on. He belongs in an assisted living facility.
If I remember correctly, it wasn’t long ago that the negotiator in chief claimed that the bigger the tariffs the faster countries line up to kiss his ass. Such a big ass and so much kissing, I guess he just couldn’t take it anymore. Just maybe, Trump has the first Musk AI chip implanted in his brain. That could explain the daily hallucinations he spews forth which forces his handlers to use pretzel logic to counteract them.
“ Such a big ass and so much kissing”
That was great. Needed the laugh!
It would appear that the long forecasted “War on Christmas” will finally come to bear this year. The war being between the haves and have nots in retail. Those who are front running tariffs now will be able to sell the 2 dolls instead of 30 at whatever price they choose.
Being the only game in town those who can sate the eternal need to buy kids crap they want but don’t need, better known as paying homage to birth of the Christ, will surely be the victors.
This seems like a mutually beneficial non-outcome: the Chinese get a good enough outcome for nothing and Trump gets renewed for another season of Tariff Man. The media’s surely going to do their part making this all seem exciting and rational so that their star can keep grabbing our brains by the p***y. Maybe I’m not plugged into the MSM enough – can’t do it anymore – to have a feel for how much of the discussion is “WTF is this guy doing?” as opposed to “He’s doing big stuff!!!” but ten years later it still feels like his BS gets digested through the media into something 45% of the country can live with. You alluded to this in a recent article, but it’s almost like this was designed by a reality TV grasper. His presidency is one never ending media stunt designed for god knows what end. I guess to launder dollars through go-fund-me sites dressed up as meme coins and to have endangered species steaks with the biggest ass holes in the ROW. And yet, as a TV show, it apparently is still hitting; and he read the room, nobody liked the tariffs, so now we get episodes about how he is vanquishing the tariffs. Cue positive stock market headlines, distorted data for both parties, and another televised meeting replete with makeup studios, wardrobe closets, and extravagant sets. So big!
HUUUGE!
Agree 100%. It’s a never-ending reality TV show, and a never-ending grift. On today’s episode, our hero is gifted a $400M+ ‘palace in the sky’. Genius move by the Qatari royal family, btw.
Bloomberg probably fairly typical of media take, excl Fox:
“The deal ended up meeting nearly all of Beijing’s core demands.”
“Xi Jinping’s decision to stand his ground against Donald Trump could hardly have gone any better for the Chinese leader.”
“Trump told reporters that tariffs on China wouldn’t return to 145% even in the event that no deal is reached within the 90-day pause. In that case, he said that tariffs could still go “substantially higher.”
“Treasury Secretary Scott Bessent, the lead U.S. negotiator, told Bloomberg News after the deal was announced that while negotiations are ongoing, the 34% tariff level—set by Trump on April 2—“would be a ceiling” and it is “implausible” that the tariffs would go below 10%.”
The additional fentanyl 20% could be negotiated away – trade you, fentanyl for dysprosium – leaving China tariffs at 10% to 34%?
90 days also gets us to about the time when the government needs to pass a new spending bill. Stay tuned for next season of “Idiocracy: the reality TV show!”