With charges of spreading misinformation and false narratives in the air once again (not that it’s been entirely absent at any point in recent years), I’d be remiss if I didn’t spotlight a major example of the latter in particular) that’s appeared in the last week or so concerning former President Trump’s Phase One trade deal with China.
Since two years have now passed since Phase One officially went into effect, claims have mushroomed in the Mainstream Media that it’s been a complete failure. (See, notably, here, here, and here.) These claims aren’t new, and they’re not all bunk. For example, it’s true that the Chinese have fallen well short of importing as many U.S. goods as promised. But conspicuously missing in these analyses is the larger and much more important truth that the Trump China trade policies writ large have spurred major progress toward a central declared objective – bringing under control the ginormous American merchandise trade deficit with the People’s Republic.
As known by RealityChek readers, during the 2020-2021 period that represents the only full year period since Phase One began, the U.S. goods trade shortfall with China rose by 14.52 percent. The closest global proxy, the U.S. non-oil goods deficit, was up 15.66 percent. And the U.S. performance doubtless would have been considerably better had decades of neglect of health security by pre-Trump presidents not forced the nation to import massive amounts of personal protective equipment and other CCP Virus-related medical goods from China.
Moreover, since China’s first year (2002) as a member of the World Trade Organization (WTO), through 2019, the U.S. merchandise deficit with China increased by 234.07 percent. During that same period, the U.S. non-oil goods gap increased by 122.99 percent. So under Trump, a trend that had lasted nearly two decades was reversed – to China’s detriment. And clearly, the stiff tariffs on hundreds of billions of dollars worth of Chinese products imposed by the former President – which were left completely intact under Phrase One – deserve major credit.
In addition, as reported in the Financial Times on Tuesday, between 2020 and 2021, the European Union’s (EU) merchandise deficit with China ballooned by 36 percent. That’s nearly 2.5 times more than the widening of the U.S.-China gap. And although Beijing lacks unfettered entry into the EU market, Brussels has erected nothing like the Trump tariffs to slow imports from China. In other words, EU trade with China is a clear control group for U.S. trade with China, and the latter dramatically outperformed.
It’s legitimate of course to claim that bilateral trade deficits don’t matter, and that the trade war conducted by Trump harmed the nation on net (although the evidence is shaky or non-existent when it comes to metrics like output and employment in the trade-heavy U.S. manufacturing, or inflation in the overall economy).
But arguing that Trump’s China trade policy had no effect on U.S.-China trade flows or the China trade gap, or left the former President’s goals on this front unmet, says nothing useful about the state of bilateral commerce, but speaks volumes about the biases of the critics.