Trumpdate – Beginnings with China

In our ‘1st Quarter 2017 Newsletter’, we had our first “Trumpdate” article. At the time, all anybody really knew was that this Presidency was not going to be like any other. The direction that the Administration was going in was still developing. Now the image is getting a little clearer. In the past couple of months, trade talks have increased, especially around the in the subject of China. In early November of 2017, President Trump visited China and began the next phase of discussions with President Xi Jinping.

President Trump’s approach to China during his early stages had been shaped by his deeply felt opinion that unfair trade practices have harmed American workers. After July’s Comprehensive Economic Dialogue; both the U.S. and China expressed their interest in narrowing the trade deficit. Many have predicted that based on the staff that President Trump brought on his most recent trip, the deals will likely center around China buying American energy, farm products, aircraft, and machinery.

On this topic there are two major developing opinions within American business communities:

  • First, people are concerned that President Trump’s focus on the deficit could distract from larger problems such as market access and global competition. As we all know, China is the most populated country in the world. Those populations are potential customers for U.S. manufacturers that do a lot of exporting to China. Inaccessible markets would be a problem. China has always been strict with their industry policy, and could use those policies against the United States such as limiting investments or exports.
  • Secondly, people have developed the thought that China will see President Trump’s proposal as an opportunity to open different industry sectors to foreign direct investment. This scenario will benefit all parties. The U.S. manufacturers will gain more business with China, and China’s economic growth will be boosted from all the foreign direct investment.

The result is still beyond anybody’s prediction. From his November visit, President Trump was able to sign $9 billion worth of deals. The two countries sealed a total of 19 agreements covering bioscience, aviation, and smart manufacturing. It was also announced that Chinese e-commerce giant JD.com would buy $2 billion of U.S. goods, predominantly beef and pork-based products. The U.S. was able to gain more exports from China and reduce the trade deficit. In return, China has proposed broader economic interaction between the two countries, including:

  1. Buying more manufactured products and energy from the United States
  2. Lifting export restrictions on hi-tech products so that more Chinese products can be imported to the U.S. to help reduce the trade deficit
  3. Having more opportunity to cooperate with the U.S. in research and development fields such as space and aviation
  4. Implementing the U.S. participating with the “Belt and Road Initiative” as well as the Asian Infrastructure Investment Bank
  5. Requesting the U.S. to tone down the Section 301 probe into alleged Chinese IP Violation

Stay tuned for our next Trumpdate coming to you at the end of March 2018.