A degree of resolution is finally in view in two of the fights Donald Trump has picked with the US’s trade partners. Deals have been announced for a US-China trade truce and to finalize USMCA, the update to the North American Free Trade Agreement with Canada and Mexico. Either would help to mitigate the damage caused to two of the world’s most intense trading relationships. But that is a heart-sinking low bar for success. With this president, all announcements should be taken with skepticism. The full details of the US-China deal have not been published, and it is only billed as a preliminary deal for modest de escalation while more comprehensive, and difficult, talks continue. Meanwhile, the signing of USMCA was briefly held up because of Mexican objections to details in US legislation aimed at bringing congressional Democrats on board.
In a best-case scenario, both agreements will stick. This is no guarantee that Mr Trump will refrain from sabotaging trade relations in some other way. USMCA itself contains a revision and a sunset clause, setting businesses up for renewed uncertainty just a few years down the line.
The deal with China ostensibly rolls back some tariff increases and suspends new ones, but contains problems of its own. Chinese promises to respect intellectual property rights can quickly turn into triggers for a new tariff war if Washington declares itself unsatisfied with Beijing’s compliance. Worse is the promise to buy
$4obn worth of soya and other US farm products. Agricultural purchasing targets, redolent of socialist five-year plans, fly in the face of Washington’s traditional role as a defender of free markets. Ironically, Beijing is the one left having to insist that the quotas will have to satisfy market terms.
Under Mr Trump, the US government is behaving like a bartering huckster rather than a maker and enforcer of rules under which the private sector can trade and thrive. That reflects a primitive understanding of trade, in which bilateral surpluses – sending more products abroad than Americans receive in return – are chalked up as victories. Lowering the costs of cross-border trade by agreeing on mutually binding rules, meanwhile, is anathema to the “America first” president.