Plainly, there are sound economic reasons to reconsider the trade war. Those don't seem to have entered into the administration's calculations, which appear to be much more focused on politics. Both sides have immense incentives to quell the wartime rhetoric and keep their guns holstered -- for the moment. Trump faces an impeachment trial followed by a Presidential election, amid signs that economic growth is slowing. The Chinese regime faces civil unrest as well as a slowdown in economic growth.
Once those conditions pass, however, so will the conflicts. As Claire Reade, a former U.S. trade enforcement official, told my colleague Don Lee, "the fundamental tensions between the U.S. and China will not subside, even if the administration has achieved some incremental progress as well as met certain political goals that could calm the relationship for the short-term."
The biggest question raised by the Phase-1 agreement is whether China is serious about its import commitments. Many experts call them "ambitious," which is a polite way of saying "unlikely."
Consider the commitment of more than $52 billion in energy imports over two years. China imported about $8 billion a year in crude oil, liquefied natural gas, and other energy products from the U.S. in 2017 and 2018, but the trade fell off sharply last year during the trade war.
The agreement suggests that Chinese imports would more than triple, which would be an enormous ramp-up, considering that the country has other import sources and is also trying to develop domestic exploration. In any case, American crude is different from the feedstock that China's refineries are designed to use.
Ironically, for all that the administration is touting the agreement as one that "rights the wrongs of the past," as Trump put it at the signing ceremony, it may well knit the two countries closer together in an uncomfortable interdependent relationship. American manufacturers and growers may become dependent on the import target written into the deal -- increasing their risks if they ramp up to meet a Chinese demand that could disappear after the deal's expiration.
The U.S. remains China's largest single export market, and China is America's largest supplier of imported goods. Trump's trade war hasn't changed that yet, nor has it seemed to alter the trajectory of the trade relationship for the future. He has just made it more expensive.
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