Conservative blogger Gordon Howie is struggling to find signs of hope from the Republican President with whom he is stuck. He cheers tentatively for the “gigantic“, “herculean” trade agreement with China that Commerce Secretary Wilbur Ross announced last week.
Yes, Gordon, those are mock quotes:
Trade experts were quick to point out that the agreement, which largely focuses on agricultural goods, energy and financial products, does nothing for U.S. manufacturers, long a source of tension in the relationship with China.
“These are modest moves which by themselves will not have much effect on the U.S. economy,” said David Dollar, a senior fellow at the Brookings Institution and former Treasury Department official [“New China Trade Deal Is Big But Not as Big as Trump Administration Says,” AP via Fortune, 2017.05.15].
China says they’ll start buying U.S. beef by July 16, but lifting the beef ban was in the chute last year. The Chinese appear to be squeezing all the leverage out of the beef ban as they can, now using it to get us to buy their cooked chicken, even as they keep out our chicken, a ban in place since our Midwest bird flu outbreak in 2015.
The deal also opens the door for U.S. companies to export liquefied natural gas to China… but wait: won’t reducing U.S. supply increase U.S. prices?
A number of U.S. companies are seeking permits to build facilities to process liquefied gas, which would allow America to become a net exporter of gas, something it has not been since the 1950s. China is attempting to turn to natural gas as a way to reduce its dependence on coal and combat the country’s extensive air pollution. The move would allow China to diversify its supply and provide a significant market for American suppliers — though the expansion could boost prices for U.S. consumers.
Ross downplayed the impact, pointing to the decline in natural gas prices. “If you look at it on a historical basis, there’s plenty of room to go back up,” he said. “It’s not as though this is going to wreck anybody’s pocketbook” [“Commerce Secretary Ross Calls the New U.S.-China Trade Deal a ‘Herculean Accomplishment’,” AP via Fortune, 2017.05.11].
This is the same Wilbur Ross who said jacking up the cost of building a home by $1,236 with new tariffs on Canadian lumber is a “small increase.” It sounds like it’s been a long time since billionaire investor Wilbur Ross paid his own gas bill or bought his own lumber at Menard’s.
The agreement also makes some “initial commitments” to open up financial services, but an international trade expert calls the language “underwhelming” and “aspirational.” Don’t let Ross or Trump fool you—this agreement by itself doesn’t do much:
Randal Phillips, Mintz Group’s Beijing-based managing partner for Asia, said that Washington was too focused on selling more to China and should instead seek to address structural imbalances created by Chinese industrial policies and barriers to investment.
“That’s going to be the challenge, and hopefully the Trump administration doesn’t start declaring victory,” he said [Ayesha Rascoe et al., “U.S., China Agree to First Trade Steps Under 100-Day Plan,” Reuters, 2017.05.12].
Cheap canned chicken from China, in return for maybe some beef sales and higher gas bills. Gordon, I am not enthused.