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Trump should push for better trade deal

Recently announced pact with China amounts to a trade truce

President Trump on Oct. 11 announced a trade deal with China that he called “tremendous” or “tremendously” positive 15 times. The details look far more modest to us, but this truce in the trade war beats the alternative of escalating tariffs that have already caused a significant global economic slowdown.

Mr. Trump said China will make some $40 billion to $50 billion more in agricultural purchases over two years and has promised to better protect intellectual property and welcome more foreign financial services. In return the U.S. won’t increase tariffs to 30% from 25% on $250 billion of Chinese goods this week as Mr. Trump had planned.

The two countries also agreed to keep talking toward what Mr. Trump called a “phase two” agreement that would include the tougher issues such as Chinese technology theft and predatory regulation against American companies. There will also be a new consultation process to address disputes and monitor enforcement. The implication is that if progress continues, Mr. Trump will cancel the tariffs planned for December on more Chinese goods.

In essence both sides sued for a temporary peace to forestall further economic damage. China avoids a tariff escalation that has been hurting its exports and induced Beijing to impose capital controls to avoid capital flight and a run on the Chinese yuan.

Mr. Trump gets election-year farm purchases that will alleviate the harm his tariff war has done to American farmers. Equity markets should be relieved, and higher stock prices would buoy fading consumer confidence. …

None of this amounts to the kind of grand deal that would fundamentally shift China’s relationship to the world trading system. President Xi Jinping will still be able to avoid the hard decisions that would require him to reform state-owned industries or rein in the thieves at the ministry of security.

Assuming the truce holds through the 2020 election, Mr. Trump may believe he can then resume negotiations in a stronger position vis-a-vis China. He made no concessions on Huawei, the Chinese telecom company whose chief financial officer has been charged with fraud in an attempt to evade U.S. sanctions against Iran. If Huawei is a threat to U.S. national security, then it should be considered separately from these trade talks. …

Mr. Trump deserves credit for challenging China’s abusive practices, but he’d be in a stronger negotiating position had his tariffs not done so much to weaken the U.S. economy. By withdrawing from the Trans-Pacific Partnership, he reduced U.S. trade leverage with China. By imposing steel and aluminum tariffs on allies, he made it harder to form a coalition of trading partners to confront China as a united front. By focusing on the economically irrelevant bilateral U.S.-China trade deficit, he distracted from China’s serious trade abuses.

If Mr. Trump gets a second chance with China in a second term, these are the mistakes to avoid if he wants a better deal.

-The Wall Street Journal