Remember the run-up to phase one trade deal?
The Trump administration boasted positive trade headlines around the clock to pump the stock market in 2019 and even in early 2020. The headlines, dubbed “trade optimism,” unleashed multiple expansion in stocks as President Trump told farmers to buy ‘more land,’ ‘bigger tractors’ to handle China’s farm purchases.
President Trump was quoted numerous times, calling the phase one trade deal, the “granddaddy” of all deals, but now, as we’ve outlined, the trade deal was the greatest farce ever.
Not too long ago, the president recently said he’s not focused on the next phase of the trade deal, otherwise known as “Phase Two.” Odd, because on many occasions, the president was heard touting the next round of deals.
On Monday, we told readers, “China is severely lagging behind purchase commitments laid out in phase one trade agreement.”
Citing the Peterson Institute for International Economics’ (PIIE) trade tracker, we showed how China’s monthly purchases of US goods covered by the deal through June are at purchase levels of around 47% of year-to-date targets.
The lack of Chinese buying is not President Trump’s fault, though enforcement of the deal certainly could be.
While examining trade flows, we uncovered a startling figure that shows China doesn’t need energy products from the US anymore.
Outlined in a series of charts via Reuters, China has only bought 5% of the targeted $25.3 billion in energy products under phase one agreement.
This chart is absolutely stunning…
“China is unlikely to fulfill its Phase 1 commitments as they were overly ambitious, to begin with,” said Michal Meidan, the director at the Oxford Institute for Energy Studies.
Days after the agreement was signed, we outlined in a report titled “A $50 Billion Hole Emerges In Trump’s China Trade Deal” how the number of purchases China needed to make this year to fulfill the agreement was “unrealistic.”
China’s failure to comply with trade commitments, and Trump administration’s lack of enforcement, can only suggest this deal was the greatest farce ever.
Here’s the biggest joke of them all: “China Agrees To Buy More Cars, Airplanes, Energy From US In Phase 1 Trade Deal.”
It’s just comical at this point, of all the bullshit “trade optimism” headlines that have resulted in an underwhelming deal. While the stock market soared to new highs on the president’s hyped headlines, the real bagholders are farmers, coal miners, factory workers, and blue-collar Americans.
The lack of enforcement could be reversed on August 15 when the Trump administration is expected to hold high-level talks with China to review Beijing’s compliance of the deal.