That sound you may have heard Wednesday morning was that of a heavy truck spinning its wheels, as President Trump signed an agreement with China that imposes a cease-fire in a trade war that has achieved virtually nothing for Americans, except the imposition of enormous economic costs on U.S. consumers, farmers and manufacturers.
At the signing ceremony, Trump called the deal "transformative," which is surely an exaggeration. The agreement leaves in place most of the tariffs Trump has imposed on Chinese goods since 2018, which means that most of the retaliatory tariffs China has imposed also remain.
Notwithstanding Trump's mantra that the tariffs are paid by the Chinese, trade experts are virtually unanimous in concluding that they've been paid entirely by Americans. As a result, according to recent research by the Federal Reserve, that meant higher prices for U.S. consumers, lower manufacturing growth and the cratering of agricultural exports.
Steep tariffs are "the new normal in the troubled US-China economic relationship," Chad P. Bown of the Peterson Institute for International Economics observed last month, after the essentials of the deal were first announced.
Even after the agreement, the average U.S. tariff on China imports will still be 19.3%, a modest reduction from the pre-agreement level of 21% and more than six times its level of 3% before Trump launched the tariff war.
Through the deal, China commits to making $200 billion over the next two years in new purchases of agricultural and manufactured goods, services, and crude oil and other energy. But there are widespread doubts that China actually can absorb imports on such a scale. That points to the question of how its commitments can be monitored and enforced.
The agreement incorporates a bilateral enforcement mechanism, but Trump has displayed profound hostility to other international trade enforcement bodies, notably the World Trade Organization, which could have been brought in to oversee China's compliance.
If China fully complies with all the terms of the deal, that would go a long way to meeting one of Trump's explicit goals on trade policy -- reducing China's enormous trade surplus with the U.S., which reached a record $323.3 billion in 2018. The surplus fell last year to $295.8 billion largely due to the tariffs, but that was still larger than in any year other than 2018.
But the deal does little to affect the structural imbalance in U.S.-China trade -- the inbred factors that prompt Americans to buy more from China than U.S. manufacturers and growers sell there. "This is a managed-trade agreement, not a free-trade agreement," says Raj Bhala, an international trade expert at the University of Kansas School of Law.
That prompts doubts about how U.S.-China trade will look after the specific commitments expire in two years, especially since the agreement signed Wednesday fails to cover some of the non-tariff trade barriers that keep China's markets largely closed to U.S. manufacturers and that ostensibly prompted Trump's trade war in the first place. These include government procurement restrictions and subsidies to state owned enterprises.