A New Deal, A New Era

A New Deal, A New Era

Issue 3

01.21.20 - Previous presidential administrations did very little as China paid no regard to WTO (World Trade Organization) rules, gaining an unfair advantage in trade markets since joining the organization in 2001. When President Trump took over, the U.S. took a tough stance against Chinese trade policy, and as a result of this heavily reported “trade war”, the two countries had signed “phase one” of a trade deal in a de-escalation of economic tension between the two powerhouses.

The deal would require serious structural reforms to China’s economic regime in regards to issues pertaining to IP, currency and foreign exchange, and technology transfer. The deal also includes a commitment to buy hundreds of billions in U.S. services and goods over the next couple of years. The deal, in actuality, can more accurately be described merely as a ceasefire between the two nations.

Since the trade war began, American farmers have suffered mightily after China placed tariffs on U.S. agricultural products, and production costs have risen as the two economic powers have exchanged jabs. Nevertheless, China’s willingness to come to the table have demonstrated that Trump’s tariffs have been, at the very least, somewhat effective and have hit China where it hurts.

Recently China’s growth has significantly slowed down and the trade deficit between the two countries has been reduced – including in the area of industrial production which was a focal point of Trump’s during his election campaign. The next phase of any potential agreement needs to make technology a top priority. China allegedly strong-arms US corporations into handing over technology and IP over to Chinese companies in exchange for access to the Chinese market. Forced technology transfer reduces the incentive for innovation and China has been getting away with it for far too long.