Nixon China Trade Agreement

After the trade talks halted, the Trump administration is raising tariffs on $200 billion of Chinese goods by 10 to 25 percent. China expects the announcement of plans to increase tariffs on U.S. goods worth $60 billion. President Trump says he believes the high costs imposed by tariffs will force China to make a favorable market for the United States, while the Chinese State Department says the U.S. has „extravagant expectations.” A few days later, the Trump administration banned U.S. companies from using foreign-made telecommunications equipment that could threaten national security, a move it is believed will target Huawei. The U.S. Department of Commerce also includes Huawei on its blacklist for foreign companies. President Donald J.M. Trump is hosting China`s Xi Jinping for a two-day summit at Florida`s Mar-a-Lago estate, where bilateral trade and North Korea are at the top of the agenda. Subsequently, Trump pleads for „huge progress” in U.S.-China relations and Xi cites deep understanding and greater trust. In mid-May, U.S. Commerce Secretary Wilbur Ross unveiled a ten-part agreement between Beijing and Washington to expand trade in products and services such as beef, poultry and electronic payments.

Ross describes the bilateral relationship as „reaching a new peak,” although countries are not addressing more controversial trade issues such as aluminum, auto parts and steel. In an essay for Foreign Policy, US Secretary of State Hillary Clinton sketches an American „pivot” to Asia. Clinton`s demand to „boost investment — diplomatic, economic, strategic and otherwise — in the Asia-Pacific region” is seen as a step to counter China`s growing influence. This month, at the Asia-Pacific Economic Cooperation summit, President Barack Obama announced that the United States and eight other nations have reached an agreement on the Trans-Pacific Partnership – a multinational free trade agreement. Obama later announced plans to deploy 2,500 navy troops to Australia, prompting criticism from Beijing. The intervention showed that China is ready to wage any war that the United States is waging to the end at all costs. The inflammatory language of rallying people together for the trade fight with the United States should not be seen as mere rhetoric. The Bretton Woods system had tied the dollar to a fixed price in gold ($35 per ounce) and had forced other nations to keep their monetary values at a fixed ratio to the dollar.

This brought both stability and liquidity when the international economy recovered from World War II, but the dollar had been overvalued when other nations, notably West Germany and Japan, began to build trade surpluses with the United States. In 1958, 1960 and 1968, U.S. gold reserves, when holders of foreign dollars began exchanging their surplus greenbacks for gold, for fear of a surprise devaluation of the dollar. The Trump administration could strike a trade deal with China if Beijing offers concessions. The U.S. trade deficit with China increased from $273.1 billion in 2010 to a record high of $295.5 billion in 2011. This increase represents three-quarters of the growth in the U.S. trade deficit for 2011.

In March, the US, EU and Japan submitted a „request for consultations” with China to the World Trade Organisation on its restrictions on the export of rare earths. The United States and its allies say China`s quota violates international trade standards and forces multinationals that use the metals to relocate to China. China calls this „hasty and unfair” and has praised defending its rights in trade disputes. . . .

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