Could China Buy $200 Billion More in US Goods?
President Donald Trump had been considering a trade deal with Beijing that might have eased trade tensions and get China to help smooth the way for a summit with North Korean leader Kim Jong-un.
Chinese president Xi Jinping reportedly discourages Kim from meeting with Trump when the US president turns the screwsoin China over trade.
These Chinese negotiators were preparing to offer to buy $200 billion worth of US goods, allowing Trump to claim he was reducing the trade deficit with China and rebalancing the trade relationship with the world’s second largest economy.
China’s trade surplus with the United States hit $372.5 billion last year.
In return, China was asking the US to set aside tariffs and investment restrictions it has threatened against Chinese companies, including lifting sanctions on the telecommunications company ZTE, which said it was closing its doors after the Commerce Department imposed restrictions on dealing with US companies as punishment for violating Iran sanctions.
Trump’s seesawing between seeking accommodation with China and threatening to start a trade war is also explainable by internal administration politics. Peter Navarro is the White House trade adviser and advocates tough policies toward China. He came up with the plan to impose tariffs on $50 billion worth of Chinese goods and threaten levies on another $100 billion.
Treasury Secretary Steven Mnuchin wants to negotiate a deal that would defuse a trade war with China. Mnuchin has reportedly cut Navarro out of meetings with Chinese negotiators.
The talks with China were all about reducing the US trade deficit with China by $200 billion. But experts say those numbers are not realistic because, among other reasons, the US economy is running near full capacity, and would not be able to produce enough new goods to meet Chinese demands.
Even if the US could shift sales to China from other countries in a big way, a dubious proposition, the US trade deficit with the world would remain unchanged.
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