Derek Scissors: US-China Trade Policy Over the Last Nine Months Was a Waste of Time

Ineffective US-China Trade Policy

• 💡 Derek Scissors, an Asia economist at the American Enterprise Institute, believes the last nine months of U.S. policy towards China have been a waste of time.
• 🎯 He likens the recent meeting to a "jumped up version" of previous meetings where problems were declared solved, only for issues to resurface later.
• 📉 Current U.S. policy is seen as being back to where it was at the beginning of the Trump administration, with little significant change.

Chinese and US Strategic Maneuvering

• 🇨🇳 China is not yet ready to enforce broad export controls on rare earths, meaning their stated delays are not a significant concession.
• 🇺🇸 The U.S. is attempting to prepare itself to resist Chinese coercion over supply chains.
• ⚠️ The recent fentanel tariff cut, while welcomed by some, makes China more competitive in U.S. supply chains, potentially giving them more leverage.

Supply Chain Diversification Challenges

• 🚢 Some American companies have disinvested from China and sought alternative supply chains, a trend Scissors wishes were more widespread.
• 📉 However, he anticipates that some American companies will face difficulties due to their continued dependence on China.
• 🌽 For example, some farmers who previously relied on selling large volumes of soybeans to China are now recognizing this is unsustainable.

Trade Deficit Goals and Reality

• 📊 The administration's focus on reducing the trade deficit is questioned, with Scissors distinguishing between real reduction and simply shifting imports through other countries (transshipping).
• 📉 He doubts the administration will effectively address transshipping.
• ⏳ If the aggregate trade deficit remains high and foreign investment in the U.S. does not materialize, President Trump may face challenges discussing these trade deals next year, suggesting the administration has primarily been stalling.