There's now a US-China trade deal — but what about the workers?

There's now a US-China trade deal — but what about the workers?
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Stock markets soared Wednesday morning in anticipation of a U.S.-China trade deal that many hope will ease tensions between the world’s largest economic powers. But good news for Wall Street isn’t always good news for Main Street. Now that there’s a U.S.-China deal in place, the relevant question is: What does this agreement mean for working-class Americans?

The answer is “not much.”

President TrumpDonald John TrumpDemocrat calls on White House to withdraw ambassador to Belarus nominee TikTok collected data from mobile devices to track Android users: report Peterson wins Minnesota House primary in crucial swing district MORE originally justified his trade war by arguing that free trade no longer served America’s interests. Specifically, years of import competition and a swelling trade deficit crowded out domestic production. The result was wage stagnation and, for millions of manufacturing workers, unemployment.

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Trump’s solution to these problems was simple. Slap tariffs on imports to make them less attractive to American consumers. Since tariffs increase the price of foreign goods, consumers should be less likely to choose Chinese imports over American-made alternatives.

Of course, higher costs are exactly why economists – and many American industry associations – insist that tariffs are a bad idea. Americans have to pay more for their everyday goods in exchange for protecting a few domestic industries. Importantly, this pain isn’t felt evenly across the economy. Working-class households are more likely to consume foreign goods. Therefore, the costs of trade protection are concentrated on poorer families.

By all serious accounts, America’s working households have been paying the costs of the trade war. Does this deal bring any relief?

No one expected this Phase One deal to erase tariffs overnight. It is best viewed as a ceasefire rather than an end to the war. As such, it’s a mixed bag.

There is some good news for America’s farmers. Prior to the signing ceremony, indications were that China committed to effectively double its purchases of U.S. agricultural goods — the industry hit hardest by Beijing’s retaliation over the last few years. On Wednesday, Trump announced a commitment from China to buy $50 billion in agricultural goods. For now, that’s welcome relief for America’s ailing agricultural sector.

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Those agricultural purchases are part of a broader commitment that Trump says will be “much more than $200 billion” and is said to include $75 billion in U.S. manufactured goods.

That all sounds good on paper. But it isn’t enough to lessen the pressure facing America’s working-class households. During the signing ceremony, representatives were at pains to avoid the most important caveat: Existing tariffs will remain in place.

The Trump administration previously suspended plans to increase tariffs in late 2019. But any additional cuts look like they have to wait until a Phase Two deal. That means the higher costs facing workers aren’t going away any time soon.

These costs are significant, with some estimating that now almost two-thirds of consumer goods are subject to tariffs.

This first deal may very well prove to be an important – if largely ceremonial – step forward. But there’s a danger in forgetting how much work remains to be done. Tariffs are quickly becoming the new normal. It’s important to keep in mind that America’s current barriers are a recent invention.

And it’s not just about China. While U.S.-China relations dominate the headlines, there’s another, quieter trade war being waged across the Atlantic.

More meaningful progress is required before any of the American workers Trump was supposed to help protect reap any rewards from this long, costly process — which still has no clear end in sight.

Jeffrey Kucik is an associate professor in the School of Government and Public Policy and the James E. Rogers College of Law (by courtesy) at the University of Arizona. He also authors the trade politics blog trademonitoronline.com.