The U.S. still has some leverage over China, because China clearly wants a deal. ... U.S. financial markets also seem to have been boosted by the prospects of a U.S.-China trade deal, so I think it could have a negative effect on both financial markets and economic activity in both countries if a deal is not struck
After years of asking China to become a more market-driven economy, the Trump administration would be explicitly asking the Chinese to set aside market forces when it comes to exchange-rate determination. ... That’s a worrying precedent.
Even if China were to provide greater access to its markets today, if the U.S. economy were to do well, and China were to slow down, the deficit might actually increase...It would certainly be problematic to view the size of that deficit as an indicator of whether trade is fair.
The [International Monetary] Fund has become more willing to question its own longstanding orthodoxy, and is more open to trying alternative approaches to crises. [However,] the Fund still remains politically toxic for leaders in Asia.
Mr. Trump seems to want to move the U.S. toward China’s approach, rather than move China toward the U.S. approach of open trade and globalization. He seems to want the U.S. to be more like China than China to be more like the U.S. And I’m not sure that’s the best path for the U.S. to go down.
If the Trump administration follows through on the proposals in this document, it would be a body blow to the multinational trade system that the U.S. has helped to build up. The WTO will lose effectiveness and credibility in trade resolutions if the U.S. decides to walk away.
Tariffs on imports from China will not serve as a magic wand that brings back lost jobs. Rather, such tariffs could end up inflicting collateral damage on U.S. businesses and hurting job growth in companies that have built international supply chains.