The US China Phase 1 Deal Interpreted: Break Thing, Claim to Fix Thing, Repeat

Through 2018M03, US exports to China were growing smartly. The Section 232 and Section 301 actions were announced. The “deal” essentially restores real exports to China to the pre-shock trend for 2020, above for 2021 (if you believe!).

If the commitments to the deal’s export provisions are upheld, then there is a quantitatively important impact, at least insofard as the US-China bilateral balance is concerned.

However, what if nothing had happened in the US-China trade war. Well, me might have gotten  to where we are supposed to be with the deal…

Figure 1: US goods exports to China, log transformed, seasonally adjusted using ARIMA X11, deflated by price index for all US commodity exports (blue), forecast based ARIMA(1,1,1) in logs 2016-18M03 (red), 90% prediction interval (gray lines), and implied deal levels based on 2017 baseline (green), using implied level of export prices for 2019M12 extrapolated from 2016M03-2018M06. All in bn 2000$, SAAR on log scale. Source: BEA/Census, BLS, and author’s calculations. 


16 thoughts on “The US China Phase 1 Deal Interpreted: Break Thing, Claim to Fix Thing, Repeat

  1. pgl

    “Break Thing, Claim to Fix Thing”.

    This is as good as Tim Taylor’s line about seeing a parade, then hustling to the front and pretending to lead it. Which of course applies every time Trump credits himself for the labor market being stronger than say back in early 2009.

  2. pgl

    ‘The “deal” essentially restores real exports to China to the pre-shock trend for 2020, above for 2021 (if you believe!).’

    Do we believe a forecast that was constructed by the White House “economic team” led by Lawrence Kudlow? Hardly. At least it was not created by Kevin DOW 36000 Hassett.

  3. pgl

    Trump’s marketing team keep saying this will be an extra $200 billion of exports to China even though their own rosy forecast show only an extra $100 billion per year from what you note were depressed levels. But the marketing team is missing an opportunity. Call the real boss – Putin – and make it $500 billion. Of course that is $100 billion per year times 5 years. After all, Putin is an old fashion Communist and 5-year plans were standard in the day.

  4. 2slugbaits

    This is an honest question. In terms of the environment and global climate, is it a good thing that farmers will be producing more monoculture grains, dairy, beef and pork for export?

    1. pgl

      What a load of worthless babble – even for you. Like your boy (Trump) has a clue how to improve our health care system.

    2. noneconomist

      I missed it. What was broken by Obamacare? The Republican DGS Plan (Don ‘t Get Sick)? The 2010 Republican plan for health care reform? Which was?
      Sure.we’re all waiting for that much cheaper, much simpler, much better, much more comprehensive health pan promised by Trump in 2016 but now due out in 2021.
      Then again, if you have NO plan, you can’t break it. Thanks for the review. Bruce.

  5. Barkley Rosser

    Well, clearly the important item that got publicized was infant dairy formula. Whatever else he does, Trump is for On Wisconsin!

  6. joseph

    Friday Larry Kudlow, Trump’s economic adviser, said that they are looking into “reforming” the Federal Corrupt Practices Act (FCPA) which bars US companies from paying bribes to foreign officials to secure contracts. Trump argues that American businesses can’t compete if they can’t bribe.

    I kid you not, this isn’t a joke, Trump wants to make bribery legal in business. Because it is the only way he has ever operated his business.

    1. pgl

      I know Kudlow is generally a joke and as corrupt as it gets but I had to check the veracity of what you said:

      Kudlow says Trump ‘looking at’ reforming law on bribing foreign officials

      Basically this is something Trump wants but Kudlow claims they are responding to complaints from certain companies. I bet the complaints come from companies owned by Wilbur Ross with ties to RUDY! After all – RUDY “knows corruption”. So we cannot let our laws get in his way!

    2. joseph

      pgl: “I had to check the veracity of what you said.”

      You would think that by now you would have accepted the fact that no matter how bad you can imagine Trump to be, he’s actually worse than that.

      1. pgl

        The business world has this expression “exceed expectations”. That normally means do better than what is expected of you. Trump has turned that on its head. We generally imagine Trump and his minions of doing some really bad stuff and they almost always do “exceed expectations”.

  7. Not Trampis

    since I am over 60 I can repeat things regularly.

    how can you have a deal yet have no dispute resolution process?

    what happens if either party has a major problem with the other?

  8. Moses Herzog

    I thought this was interesting, and worthy of sharing. NYT can be wrong about things. They prove this at least twice every week by publishing David Brooks’ columns:

    I have access to free hardcopies of the NYT on weekdays. But sometimes I pick it up on Sunday or other holidays at the bookstore by cash. I will be boycotting any purchases of the NYT until they correct this—which is a near criminal thing to do to a university professor, whose main currency is his/her reputation.
    So this is a serious mistake the NYT has made, in the name of clickbait.

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