The signing of a “phase one” trade deal with China is unlikely to end the fight over many of Beijing’s trade abuses, but one prominent D.C. analyst says the deal is the culmination of a changing attitude towards America’s largest trading partner.
“One of the things that Trump does absolutely get credit for is that the conversation with China has completely changed,” Ed Mills, Washington policy analyst at Raymond James, tells Yahoo Finance’s The First Trade.
Before President Donald Trump took office, Mills said, “you couldn't confront China, you couldn't have some of the conversations, or else there would be real consequences.“
Now, though, “China has largely gotten the message that the American people view China differently today than they did before President Trump got into office,” Mills told Alexis Christoforous and Brian Sozzi.
It hasn’t been an easy ride for the world economy. Trade worries have driven down expectations for growth, with the World Bank cutting its most recent global growth forecasts. And a Federal Reserve analysis found the tariffs caused more harm than benefits to the manufacturing sector.
There’s also the unfinished business that remains for a promised “phase two” deal. So far, China has not been open to resolving the biggest Trump administration complaints, including industrial subsidies and intellectual property theft.
“What China has been saying since the beginning here is they've always kind of mentioned this as a 40-40-20 problem,” Mills said. “There's about 40% of this that we could do today. 40% that can be done in five years. About 20% that is off limits. Some of the things that Trump wanted to spend the time on, and what he spent the last two years on, are things in that 20% bucket.“
“There'll be some movement here on the intellectual property side of this, but probably once again, about the bare minimum it would have taken for both sides to sit down and sign something,” Mills said.
But don’t expect the trade war to go away no matter who wins the White House in November.
“There has been a lot of volatility, and there's been certain consequences, especially among farmers and with agriculture,” Mills said. “It would be incumbent on anyone who wins in 2020 to continue this fight, because a lot of the issues he's raised have resonated in a bipartisan way with the American people.”