The Trump administration seems to have reached terms with Beijing over a “Phase One” China trade deal, which President Trump will surely tout as a victory for himself and the United States. But if the president strikes the deal on the terms being reported, he will actually be making a huge concession to Beijing that achieves few U.S. goals and is so bad that even Trump will have trouble spinning it as a political win.
Thursday afternoon, several media outlets reported that the United States and China have agreed to a limited, interim trade deal that will surely boost markets in the short term and provide a temporary de-escalation of the U.S.-China trade war. For more than two months, sources briefed on the negotiations told me, the two sides had been stuck. The Trump administration wanted to freeze tariffs in exchange for Beijing agreeing to purchase more U.S. agricultural products and granting more market access for U.S. financial firms. But China wouldn’t sign off, demanding the White House sweeten the pot by offering substantial tariff rollbacks as well.
Under the deal, China will increase some agricultural purchases from the United States, which it would have done anyway because the country is in the throes of a swine flu that has killed 100 million pigs and cut the country's pork production in half. China has also made promises to improve its protection of intellectual properties, something else that China was already doing anyway.
The agreement as contains "temporary and unreliable" concessions from China.
The benefits of the trade war are speculative but the costs are real. Trump’s tariffs have cost Americans $88 billion, one of the biggest tax hikes in history. To cushion the blow, he gave $28 billion to farmers—twice the cost of the 2009 auto bailout.