On August 14, 2019, the Dow fell 800 points, in part due to rising trade tensions between the United States and China.  Nine days later, on August 23, the Dow fell 623 points on the day Trump informally ordered U.S. companies to immediately seek alternatives to do business in China.   At the end of 2019, stock markets reached record levels after increasing due to the agreement between the United States and China on the signing of the first phase of a trade agreement.   If you simply rely on purchasing objectives, it is not only not about addressing China`s problematic policies, which harm Americans, but also helps to consolidate state planning as opposed to commercial outcomes. In particular, because China continues to impose discriminatory retaliatory duties on U.S. exporters, only its state-owned enterprises, not the Chinese private sector, will increase many purchases to meet their commitments, the opposite of what U.S. politicians say they want. The objectives of the agreement also send signals to America`s allies that the United States is primarily interested in China diverting imports from its suppliers, rather than attacking China`s problematic policies and undermining their confidence in U.S. policy. From the beginning, an additional $200 billion in sales to China were a worrying goal. Nearly 30% of U.S. merchandise exports to China are not even covered by the Phase One agreement.
And for those who covered the agreement, a review of 15 product groups shows that their sales to China have been influenced by various factors, including plane crashes, epidemics of outbreaks, export controls, World Trade Organization (WTO) legal decisions, the lingering effects of trade war tariffs and the pandemic. The agreement provides the United States with certain benefits in financial services, including electronic payments, securities, fund management and insurance, but many of these changes were already underway. Already in 2017, in its attempt to ease tensions with the Trump administration, China had tried to give foreign companies greater supremacy in its financial sector, and U.S. banks and other companies held majority stakes in Chinese companies. Details of the basic approach to mapping the 2020 annual targets for trade data are available in Bown (2020). Other hypotheses relate to the establishment of estimates for 15 different product categories, as the agreement provides only aggregate targets for the four sectors of manufacturing, agriculture, energy and services. The aim is to allocate product-level targets on the basis of the share of this product in all U.S. exports to China in 2017 of products covered by purchase obligations. See also the table below. Today, we are taking an important step that china has never taken towards a future of fair and reciprocal trade, as we sign the first phase of the historic U.S.-China trade agreement. Together, we are correcting the injustices of the past and creating a future of economic justice and security for American workers, farmers and families.
And it will be a great agreement for both countries. That is well over $200 billion, and it will grow every year.