–President Trump Confirms Tariffs Stay Until Phase Two ‘Finish;’ No Phase Three
By Denny Gulino
THE WHITE HOUSE (MaceNews) – The “Phase One” agreement was ceremoneously signed Wednesday afternoon, signaling the start of a long period of wary watching and measuring as both China and the U.S. decide if the deal is a new beginning after months of rancor or ultimately a disappointment.
”Keeping these two giant and powerful nations together in harmony is so important for the world,” Trump said.
China Vice Premier Liu He read a letter of “warm greetings” from President Xi Jinping, made an explicit acknowledgement of the commitment to spend $40 billion on U.S farm products over two years and said the pact will be “strictly” observed, possibly beginning a “bright future” for U.S.-China relations.
The actual signing came at the conclusion of an hour and a half mostly filled with Trump’s recognition of administration officials, business executives and trade group leaders interspersed with comments not on the teleprompter.
The acknowledgements went on for more than a forty minutes before Trump mentioned the presence of Liu. Trump also slipped in comments about the “hoax” impeachment exercise and excused some House members so they could return to Capitol Hill for impeachment-related votes.
Trump also added another dig at the Federal Reserve as he recognized ex-Board member Kevin Warsh, again noting interest rates are lower outside the United States.
President Trump affixed his signature in the East Room ceremony attended by representatives of many trade groups whose members hope to benefit from new and resumed China spending. That it was Trump’s signature was somewhat unusual in that his direct counterpart, President Xi, was represented by the lower ranked vice premier. At one point in prior days it was to be U.S. trade ambassador Bob Lighthizer who was to do the signing for the U.S. side.
The Chinese media were present en masse but some observers, like Hong Kong’s South China Morning Post, noted that at Beijing’s end, there was a subdued media reaction with an echo of Washington’s hoopla. The day’s U.S. edition of the China Daily newspaper left the signing story off the front page.
The figures for China purchases being circulated are impressively large for the next two years, $200 billion in total, $75 billion of that for factory goods and $40 billion for soybeans, pork and other agricultural products. Some of those numbers have yet to be confirmed by China though they were contained in the agreement Liu signed.
Exactly how China’s spending will be distributed among commodities was kept private to preclude sudden market reactions, though as the day wore on, more purchase details were circulated in trading rooms although not confirmed.
Administration officials, like Treasury Secretary Steven Mnuchin, on the White House driveway Tuesday night and on CNBC Wednesday morning, kept pounding away at what they’ve described as erroneous news references to how existing U.S. tariffs will be maintained on China at least past the presidential election. As Mace News reported Tuesday evening, Mnuchin insisted election timing has nothing to do with it, and that the 25% levies on $250 billion in China goods and 7.5% on another $120 billion will stay in place “until there’s a Phase Two” completed.
In his remarks Wednesday, Trump repeated what Mnuchin had said, that existing tariffs will remain until the “finish” of a Phase Two.
In briefings Wednesday morning by White House officials, plans for a graduated series of Phase Two benchmarks were disclosed yet with the primary administration emphasis placed on implementation of Phase One.
In his pre-signing remarks Trump said a Phase Three is not expected.
The current agreement provides a dual pledge not to manipulate currencies for a trade advantage, despite resident Trump’s repeated urging for the Federal Reserve to lower rates further to weaken the dollar and help U.S manufacturing exports.
In the briefings officials stressed what they consider the sturdy enforceability of Phase One so that after a period of time in which the terms of purchases and other aspects of the deal are not followed through by China, the U.S. would first initiate discussions of the disparities and if not resolved, return to concrete retaliation, presumably including additional tariffs.
Fundamental structural changes, like paring Chinese government support for “zombie” steel and other manufacturers that adds to price-depressing world oversupply is being left to Phase Two talks, an issue considerably more sensitive than the Phase One increases in China spending. There has apparently been no commitment yet
f either side for a start date for Phase Two negotiations.
Meanwhile, amid the celebratory trappings of the Phase One signing, the darker reality taking place on Capitol Hill, the preparations for a Senate impeachment trial, continued to occupy the president’s tweet channel and his rally remarks Tuesday night in Milwaukee.
About an hour before China’s vice premier was to be welcomed in the Oval Office Wednesday, prior to the East Room signing, Trump was tweeting his view that the Democrats’ call for witnesses to appear at the trial is part of what he sees as an overall sham.
“Here we go again,” he wrote, “another Con Job by the Do Nothing Democrats. All of this work was supposed to be done by the House, not the Senate!”
As the signing ceremony was under way, House Speaker Nancy Pelosi named Reps. Adam Schiff and Gerry Nadler to be, as expected, the prosecutors who will lead the team of seven House members who will manage the impeachment effort in the Senate.
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Contact this reporter: denny@macenews.com