China was supposed to buy an extra $200 billion of American goods and services over 2020 and 2021. By September 2020, with the deal only months old, it had bought $65.9 billion worth against a target of $124.9 billion, or 53 percent of where it should have been. That gap, found by analysts at the Peterson Institute for International Economics, tells you most of what you need to know about how the first Trump trade war with China ended.
How it started
The conflict began in 2018, when the U.S. trade deficit with China reached more than $377 billion, its highest point, according to the Council on Foreign Relations. Trump answered with tariffs on “hundreds of billions of dollars worth of Chinese goods,” meant to push American imports from China down.
A deal built on shopping lists
The Phase One agreement arrived in January 2020. Rather than rewrite the trading rules, it leaned on purchase commitments: China would buy more, and the tariff fight would pause. The CFR says the accord also carried some promises from Beijing to reform trade practices, but the heavy lifting was in the buying.
The way those purchases were spread explains some of the shortfall. Manufactured goods made up 70 percent of the deal, agriculture 22 percent and energy 8 percent. Aircraft exports reached only 18 percent of their target after the Boeing 737 MAX crashes. Autos and trucks got to 33 percent, held back by China’s retaliatory tariffs. Soybeans managed 48 percent because buyers had moved to Brazil and Argentina. Energy was worst, under 40 percent, with oil prices low and U.S. production capacity limited.
Not everything missed. Semiconductors beat their target, probably because buyers stocked up before new U.S. export controls took effect. Pork did too, as African Swine Fever pushed up Chinese demand.
What stayed the same
Chinese imports of the covered American goods were still 16 percent below their 2017 level, while China’s imports of the same products from other countries rose 20 percent. American farmers received tens of billions in federal subsidies even as shipments fell short.
The deeper complaints never got touched. Intellectual property theft and China’s state-backed industrial policy, both core American concerns, went unaddressed for the length of the agreement. And because China’s retaliatory tariffs stayed in place, the PIIE found that mostly state-owned enterprises, not private firms, were positioned to meet the targets, which cut against stated U.S. policy. Many experts called the deal inadequate. The CFR says China “failed to live up to” its purchase commitment.
Sources
- Trump's phase one trade deal with China and the US election
- The U.S.-China Trade Relationship: What's Behind the Competition? (Council on Foreign Relations backgrounder)
