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Trump’s China Trade Deal Killed by Corona

President Trump and Vice Premier Liu He, China’s top trade negotiator, sign a “Phase 1” trade agreement between the U.S. and China at the White House on Wednesday.

I have written several articles on our President Trump. A list of the links have been provided at the bottom of this article for your convenience. This article will, however address different aspects on President Trump’s Presidency.

The January trade pact committed China to buy more U.S. Products to reduce the trade deficit and to help spur an increase in American jobs. A major component of the Deal was the purchase of oil and gas from the U.S. However, the pandemic caused a collapse in oil demand. The lock down measures and the economic collapse resulted in China being unable to meet its purchase quotas for oil. The drop in price made it even more difficult to reach these targets. Because Saudi Arabia and Russia dumped cheap oil on the market, China had no choice but to buy from them. The trade issues were two-fold. The U.S. saw a fall in oil shale production by 1/3. So, it is unclear whether the U.S. could have met its quotas as well. Thanks to measures taken by the Trump administration, including paying producers not to produce oil, expanding lending through the Federal Reserve, filling up the U.S. strategic oil reserve and imposing tariffs on imported oil, they were able to prevent the energy industry from collapsing and resulting in hundreds of thousands of lost jobs.

While Trump’s herculean efforts saved the American energy industry, it was unable to save the trade deal with China. So it is back to the drawing board, for now. With our relationship worsening with China, this will be an uphill battle.

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