"Not tackling China's subsidies is a giant hole in the phase one deal," Bown tweeted after Wednesday's signing ceremony. "There's no way to get around it."
Although the agreement hints at progress on such issues as Chinese theft of technology, it doesn't address what Bhala calls "21st century intellectual property issues," such as privacy protections.
Finally, the deal doesn't touch China's greater ambitions as an economic player, such as those embodied in its "Made in China 2025" ten year plan unveiled in 2015. The plan calls for China to become the dominant global force in electric cars, aircraft manufacture, biotechnology and advanced telecommunications, robotics and artificial intelligence.
Administration figures have argued that the costs of the trade war are short-term, and that over time it will yield gains in employment and national security. Economists are doubtful, based on their historical sense that trade wars typically have no winners.
"While the long-run effects are still to be seen," observed researchers headed by Mary Amiti of the Federal Reserve Bank of New York, in the first year of the tariffs "the U.S. experienced substantial increases in the prices of intermediates and finished goods, ... reductions in availability of imported varieties, and complete passthrough of the tariffs into domestic prices of imported goods."
To briefly recap the trade war, Trump imposed tariffs on some $360 billion in Chinese goods starting in mid-2018. Most of those tariffs will remain in place in the wake of the agreement, although tariffs on about $112 billion in consumer goods such as clothing and sports equipment will be cut to 7.5% from 15%, and threatened 25% tariffs on another $160 billion -- including cellphones and computers -- will be held in abeyance.
And 25% tariffs remain in effect on the rest of the imports, including raw materials and components used by U.S. manufacturers to make products domestically. Trump says that the remaining tariffs won't be reconsidered until after the election.
The tariffs not only flowed through to U.S. consumers via higher domestic prices, they cost American companies in time and effort to find new suppliers outside China. American exports to China fell because of retaliatory tariffs imposed by Beijing on more than $110 billion in goods such as steel, aluminum and agricultural products. The farm economy was profoundly harmed: For example, purchases of soybeans by China, formerly the leading export partner of U.S. soybean farmers, fell to zero in November 2018.
The costs of the trade war to other sectors also has been significant. The Trump administration has announced roughly $28 billion in emergency aid to farmers affected by the trade war. U.S. taxpayers will foot the bill for those payouts, on top of the higher prices they're paying for imported and tariff-impacted domestic goods. (Most of the agricultural aid, as we've reported, goes to wealthy farmers and agribusinesses.)
An estimated $41 billion has been raised from the China tariffs thus far. According to Amiti, "This tariff revenue is a pure transfer from domestic consumers to the government." That would be tantamount to about two tenths of one% of gross domestic product, characterized by Amiti as a "deadweight loss" to the economy.