President Donald Trump has postponed until at least April the supposed deadline for concluding the United States’ current trade negotiations with China. A good outcome for both sides would be reached if China agreed to protect property rights better and reduce the state’s role in its economy; the US agreed to strengthen national saving and public investment, and both sides agreed to reverse their recent tariff increases. Unfortunately, this is not the deal that is likely to materialise.
For starters, Trump fixates on the bilateral US merchandise trade deficit. The Chinese could probably deliver on the verifiable — but worthless — step of committing to buy more US soybeans, natural gas, and other commodities. But this would have little or no effect on the overall US trade balance, because the US would export less soybeans and natural gas to other countries.
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