In a recent blog post for the Peterson Institute for International Economics, Chad Bown, an economist, explained that China did not hold up its end of the bargain in its "historical trade deal" with the United States.
Bown states that China failed to buy any of the extra $200 billion in American exports they agreed to.
"Today the only undisputed historical aspect of that agreement is its failure," wrote Bown in his post.
The trade deal was brokered in 2019 by the Trump administration following a protracted trade war between the two nations in which high tariffs were placed on exports, Bown wrote.
“One of the intentions of the trade deal was to offset the loss in Chinese revenue brought on from the trade war by having the revenue of U.S. goods surpass their 2017 levels,” the economist stated. “China, which agreed to purchase $200 billion in additional exports by the end of 2021, only purchased 57% of the goods it committed to buying.”
One lesson learned from this endeavor, Bown wrote, “is not to make deals that cannot be fulfilled.” Another, the economist emphasized, “is not to forget the complementary policies needed to give an agreement a chance to succeed."
The 18 months of trade warfare that preceded the deal made it difficult for the agreement to ever be successful, Bown stated. The trade war fulfilled its goal in distancing the two economies from one another, so U.S. exporters started the trade agreement by climbing out of the hole two years of tariffs created.
Major American manufacturing sectors also suffered greatly during the COVID-19 pandemic because of the shortage of purchases, Bown claimed. Service-based industries such as tourism were also significantly affected.
"Nearly four years later, the main lesson of the phase one agreement is that different terms for the trade relationship are still needed," Bown wrote.