Trump Hopes Trade Deals Will Boost Growth. Experts Don’t Agree.


First, the deal calls for China to begin purchasing what the administration says will be $200 billion worth of American crops and other exported goods and services. Those purchases should increase exports from the United States to China, which, all else being equal, would promote growth.

Second, and perhaps more important, administration officials appear to be counting on the agreement to revive business investment in the United States, which has fallen in recent quarters after surging in the first half of 2018. The uncertainty that Mr. Trump and the Chinese sowed as they imposed escalating tariffs on each other’s imports was largely to blame for that sluggishness, many companies and economists have said.

The bullish case for the China agreement is that it will ease that uncertainty. Some economists say the U.S.M.C.A. could do the same. For months, administration officials have touted a study by the United States International Trade Commission that predicted that the North American trade deal could raise growth by 0.35 percent, largely by reducing uncertainty over trade in digital services.

Andrew Hunter, senior United States economist at Capital Economics, backed that assessment on Tuesday. “The gap that opened up last year between investment and corporate profits suggests that tariff uncertainty has caused firms to delay” investment plans, he wrote in a research note. He added, “With the U.S.M.C.A. deal signed and the threat of further tariffs on Chinese goods seemingly off the table, that drag should now be fading.”

Many economists have praised the agreements for reducing uncertainty, but few have raised their growth forecasts because of them. That is in part because they say the deals still leave a large number of tariffs in place — particularly those against China, but also on some steel, aluminum, solar panels and washing machines imported from other countries.

They also noted that Mr. Trump had waged his trade wars on fronts well beyond North America and China. New trade battles loom this year, including one between the United States and France over a French push to impose a new tax that hits American tech giants like Google and Amazon.

Mary Lovely, a senior fellow at the Peterson Institute for International Economics, said the Phase 1 agreement was “good news for the U.S. and the world economy.” But, she said, “there remains considerable uncertainly for businesses using China as a platform for products destined for the U.S. market, and we will continue to see the impact of this in slower investment and higher business costs.”


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