US-China trade deal a ‘historic failure’ with purchases more than 40 per cent short of target, PIIE report says
- China bought only 57 per cent of the US exports it had committed to purchase under the phase-one trade deal with the United States, according to a new report
- According to the Peterson Institute for International Economics, agriculture purchases under the deal reached 83 per cent of the total commitment
China “bought none” of the additional US$200 billion of exports promised under the phase-one trade deal with the United States, a new report looking at the performance of the two-year deal signed under the Trump administration said.
The US and China signed their long-awaited deal in January 2020, and the terms outlined in the agreement took effect one month later, with China committed to buying an additional US$200 billion worth of goods and services over 2020-21, relative to 2017’s levels.
But according to a report released by the Peterson Institute for International Economics (PIIE) on Monday, China bought only 57 per cent of the US exports it had committed to purchase under the agreement, which was “not even enough to reach its import levels from before the trade war”.
Today, the only undisputed ‘historical’ aspect of that agreement is its failure
“Two years ago, president Donald Trump signed what he called a ‘historical trade deal’ with China that committed China to purchase US$200 billion of additional US exports before December 31, 2021. Today, the only undisputed ‘historical’ aspect of that agreement is its failure,” said Chad Bown, a senior fellow at the PIIE, in the report.
“One lesson is not to make deals that cannot be fulfilled when unforeseen events inevitably occur – in this case, a pandemic and a recession. Another is not to forget the complementary policies needed to give an agreement a chance to succeed.
“The emergence of the Covid-19 pandemic undermined any chance of success. Public health-related lockdowns and a short economic recession were accompanied by a temporary collapse in goods trade globally, even if China’s imports were mostly spared. Restrictions on mobility also decimated US services exports like tourism and business travel.”
As part of the deal, China committed to increasing its purchases of certain US goods and services in 2020 and 2021 by at least US$200 billion over 2017 levels. Under the deal, China agreed to buy at least US$227.9 billion of US exports in 2020 and US$274.5 billion in 2021, making a total of US$502.4 billion over the two years.