Trump said his trade war would pay off. But so far, experts see little evidence of meaningful change.

AP Photo/Susan Walsh

Washington and Beijing are reportedly approaching a deal on trade.
But experts say it’s unlikely to address the very issues the Trump administration cited before levying tariffs last year.
With that in mind, some supporters have begun to wonder what the point was.

In igniting a trade war with China last year, the White House said it would pressure the world’s second-largest economy to make sweeping changes to the way it conducts business with other countries.

Eight months and hundreds of billions of dollars worth of tariffs later, President Donald Trump appears to be bracing for the possibility of that not happening.

New York Senator Chuck Schumer is "gonna stand up and say, ‘Oh, it should have been better,’" he said of a US-China trade deal in February. "Sadly, I’d probably do the same thing to them."

Even after multiple rounds of high-level trade delegations from each country, there has been little evidence China has committed to the structural changes the US originally sought. While Trump and Chinese President Xi Jinping are expected to meet at a summit later this month, experts aren’t expecting any meaningful breakthrough.

"At least so far this looks like a slightly sweetened version of the deal China put forward last summer," said Brad Setser, a former Treasury Department official who is now a senior fellow at the Council on Foreign Relations. "It doesn’t appear to be something that is likely to be deeply transformative."

Beijing has expressed a willingness to work toward reducing its bilateral trade surplus with Washington, which Trump views as a sign of economic weakness, most notably offering to increase purchases of American products like soybeans and semiconductors.

But officials have denied enabling practices the administration set out to change following a Section 301 investigation conducted by the US Trade Representative, such as the forced transfer of foreign technology.

While China’s legislature is preparing to rework several foreign-investment laws, the New York Times reported Monday, the most recent draft fails to mention national regulators even as it prohibits local officials from forcing technology transfers.

On vows to rein in government support for high-tech and industrial companies, another longtime sticking point in negotiations, details remain elusive. Experts are unconvinced China will give up subsidies in certain sectors anytime soon.

And then there’s the issue of making sure China follows through with commitments. The Trump administration has said it may continue to use existing or potential tariffs as leverage, a proposal sure to cast further uncertainty on businesses and that presents limits.

The US already struggles to enforce these rules properly, according to Derek Scissors, a China expert at the conservative-learning American Enterprise Institute, and any deal would only add to a list of commitments to track.

"From what we know so far, the enforcement mechanism is obviously inadequate," Scissors said. "A bunch of meetings where the Chinese stall, followed by a proportional American action which we might never take due to disagreement with the administration."

Without concrete resolutions on Section 301 initiatives, some have begun to wonder: What was the point of the past eight months?

The chairman of the US Chamber of Commerce in China, Tim Stratford, told the Associated Press last week that the trade war will have been "a tremendous waste" if structural issues aren’t addressed.

Tariffs levied last year cost Americans $1.4 billion a month while foreign companies paid little to nothing, according to a recent paper from economists at the New York Federal Reserve, Columbia University, and Princeton University.

The Trump administration has acknowledged particular pain among farmers, creating an aid program to make up for a retaliatory duty on a swath of American agricultural products and claiming the trade war would ultimately pressure China to reform its economy.

But for Dave Walton, an Iowa soybean farmer who voted for Trump in 2016, the effects of tariffs would become harder to swallow if the administration were to back down on addressing structural issues.

"Without an attractive deal on both sides of the equation, this would just be painful," he said, adding that it should include new rules on non-tariff barriers like agricultural subsidies and alleged currency manipulation.

Still, the president has been seen as willing to declare modest concessions as victories in past negotiations.

"Accountability will be hindered by the fact that the American public does not know what the Chinese were asked to deliver and how these ‘asks’ were supposed to remedy the problems identified by the USTR investigation," said Mary Lovely, a trade scholar at the Peterson Institute for International Economics.

The White House did not respond to an email requesting comment.

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Source: Business Insider – gheeb@businessinsider.com (Gina Heeb)