Donald Trump Pacts a Truce With China In His Trade War

Both parties reach an agreement that invalidates the tariffs of 156,000 million dollars planned for this Sunday.

The guin of the commercial war that has been starring in the United States and China since February 2018 has had so many and changing leaps that, at times, has been unlikely. However, the main actor on stage, Donald Trump, has finally turned expectations into reality.

According to media such as Bloomberg, Trump has reached an agreement that seals the first phase of his trade pact and quarantines, as a first consequence, the new tariffs against China worth 156,000 million dollars (140,570 million euros) that They were scheduled for next Sunday. The tariffs were going to affect strategic products such as mobiles, computers, toys and clothing, and would imply total war, since practically one hundred percent of Chinese imports will be taxed with new tariffs.

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The outcome was advancing throughout the day, with a euphoric Trump who writes early in the morning: "Very close to an agreement with China. They want it, and we do too!" The enthusiasm of the president, who worried about emphasizing his message with capital letters, found a maximum audience in the international stock exchanges and on Wall Street, whose main indexes once again surpassed his historical mark. The climbs, very predictably, will continue tomorrow.

Strategy

The first phase of the trade agreement was agreed a few weeks ago, but it was still to be made official. Trump has played mouse and cat continuously since then. However, it seems that he has now finished calibrating the ground he steps on until he detects that peace is more beneficial than war for his political interests. On the one hand, because the United States is at the gates of an election campaign for the presidential elections of 2020 that is very intense. But, above all, because conversations on commercial matters serve the president to divert attention to the impeachment (political prosecution) that is already taking shape in the House of Representatives.

So, according to The Wall Street Journal, Trump chose to be great and offered to the Chinese authorities to reduce, at most, half the duties of 360,000 million he has imposed so far on the Asian giant. In addition, it will keep in the drawer the rates that were planned for Sunday.

The White House has demanded in exchange Pekn's commitments to buy more agricultural products, better protect United States intellectual property rights and facilitate greater access to the Chinese financial services sector.

The Trump Administration has tried to make these promises in writing, already aware of the lack of guarantees for the fulfillment of the agreements, it has torpedoed trade negotiations in past occasions.

China has been prone to an agreement in view of how tensions are affecting the growth of the economy. But, at the same time, it has been forced to calculate the effects of the concessions to the United States with respect to the rest of its large trading partners, such as Brazil.

The Latin American giant has benefited from the tariff war by substantially increasing the sale to China of products such as soybeans. According to experts, this has been the reason that led Trump to impose tariffs a few weeks ago on the Brazilian steel sector. The US president justified his decision in response to government maneuvers to weaken the real.

The deficit falls

The US Administration initiated the tariff war to rebalance its trade balance, especially unbalanced with China. So far this year, the figures have improved. Between January and October, exports of American products to the Asian giant with respect to imports have thrown red numbers worth $ 295,000 million, compared to the 420,000 million they reached throughout the year of 2018.

In its commercial relations with markets around the world, the US deficit amounted to 875,000 million dollars last year and has added 715,000 million dollars in the first ten months of 2019.

Trump also seems to have found widespread support in the United States in his business strategy, including from his Democratic enemies. Both parties reached an agreement two days ago to officially launch the new Nafta, the treaty that governs trade relations between the United States, Canada and Mexico.

In addition, the growth of the world's largest economy is not suffering, contrary to what was anticipated. According to the projections that the Federal Reserve (Fed) made public on Wednesday, the GDP of the United States is expected to continue growing at rates of 3% over the next three years, with a labor market with almost full employment and inflation gradually approaching the 2% objective pursued by the Fed.

The central bank recognizes that the risks are weakening and do not foresee further reductions in interest rates in the coming months.

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