Even though US President Donald Trump promised to impose tariffs on China after assuming office, he has now put the plans on holds. It appears that he is exploring the possibility of a trade deal with China.
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As US President Donald Trump is walking back on promises made on the campaign trail, he has put plans to impose tariffs on China on hold.
On the campaign trail, Trump had said he would impose tariffs to the tune of 60 per cent of China after assuming office. Now, he has instructed his officials to conduct a review of the deal signed in 2020 and see how it has fared, according to Bloomberg.
While Trump did not commit to tariffs on Chinese imports on his first day, he threatened to impose 100 per cent tariffs on Brics countries — India is part of the group. He also said Canada and Mexico would face 25 per cent tariffs from February 1.
Even as Trump is going after allies and partners, he is completely silent on US adversaries China and Russia. He has even served China a gift by saving TikTok, the app it uses to peddle pro-China, anti-West propaganda and indoctrinate the masses into becoming supporters of China.
Such a silence is in line with his longstanding friendly ties to China and Russia. Instead of dealing aggressively dealing with these adversaries, Trump has threatened to invade Denmark’s Greenland island and Panama’s Panama Canal in the Latin Ameria. For these military actions, his rationale is the same that Russian leader Vladimir Putin employed to invade first Georgia in 2008 and then Ukraine in 2014 and 2022.
It appears that Trump is exploring the possibility of a trade deal with China. During his first term, he had secured a deal with China, the Phase One Economic Agreement, in which
China gamed him and reneged completely on its obligations. Here is what the deal hoped to accomplish and how it failed.
What was US-China trade deal of 2020?
In January 2020, the United States and China signed a trade deal, the Phase One Economic Agreement, to end more than two years of tariff war started by Trump.
The deal would have served as a stepping-stone for a second deal, but, as the deal failed spectacularly, the second deal was never reached.
Under the deal, China was required to increase its purchase of US goods and services by $200 billion a year for two years. For those increased purchases, the United States cut the tariffs imposed at the time in half.
In 2017, when Trump initiated the trade war, China bought $186 billion of US exports, which meant it was supposed to buy US exports worth at least $386 billion in 2020 and 2021. Instead, Reuters reported that China bought just $135 billion of US goods and services in 2020 and $178 billion in 2021. This marked a spectacular failure of Trump’s trade war as well as the trade deal.
This means that China not just failed to increase its purchase of US exports, it did not even buy what it bought before the trade war began.
Additionally, the deal was also expected to address concerns around Chinese theft of US intellectual property and artificial devaluation by China of its currency to boost its exports.