What’s in the new trade agreement with China?
The agreement calls for China to buy an additional $200 million worth of US goods and services, in particular agricultural products — a boon for the president in an election year. The deal also includes commitments to end the theft of intellectual property by Chinese companies.
China also agreed to be more transparent regarding its foreign currency, pledging not to artificially manipulate the value of the yuan. That said, China made a similar commitment to G20 countries, so this particular victory is not Trump-specific.
In the short term, the deal ends an escalating trade war, which will calm the markets and put more money in the pockets of American farmers, who constitute part of Trump’s base. However, China has only made commitments through 2021, so what happens after that is unclear.
A clause in the agreement that creates a mechanism to settle future disputes between the two countries may spell trouble down the road. If the mechanism, called the Bilateral Evaluation and Dispute Resolution Office, fails to resolve any future trade disputes, tariff rates may return to their current levels, and a new trade war could break out.
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