Larry Kudlow: China's Non-Compliance with Trade Deal and Economic Implications

China's Failure to Uphold Trade Deal

• 🎯 The Trump administration has launched an investigation into China's compliance with the 2020 Phase One trade deal.
• 🔑 The speaker, having served on the China trade team, asserts that China never lived up to its side of the bargain.
• 💡 This non-compliance extended beyond failing to purchase agreed-upon commodities, including market opening promises, US business ownership pledges, intellectual property theft, and forced technology transfer.

China's Nature and Current Actions

• 🎭 It is stated that it is in the nature of communist dictatorships to break promises.
• ⚠️ Recent complaints from Treasury Secretary Scott Besson about China not keeping promises on rare earths agreements were not surprising.
• ⚡ The rumor mill suggests the US may restrict critical software and semiconductor exports to China.

US Response and Economic Outlook

• 📈 President Trump has imposed a 100% tariff on Chinese imports, bringing the total to approximately 155% due to China's reneging.
• 🌍 Treasury Secretary Besson views the situation as "China versus the globe," stating that China's proposed licensing regime is unworkable and unacceptable.
• 💰 The US is contemplating responses with allies if negotiations for a pause or relief on China's regime are unsuccessful, with all options on the table.
• 🇺🇸 China's attempts to blackmail the US with rare earth export controls are countered by the US having the world's largest economy and China's reliance on US exports.
• 📉 The Chinese economy is struggling with a property crash and COVID aftermath, becoming more centrally planned, while the American economy is growing at nearly 4%.
• 🏦 China and BRICS partners are selling US Treasury bonds and buying gold to diminish the US dollar's reserve currency status, but pro-growth Trump policies are expected to boost the dollar's value.

Upcoming Negotiations

• 🤝 President Trump is set to meet with Xi Jinping, and despite expected tough negotiations, Trump is known for his toughness.
• ⚖️ Trump will likely remember China's total reneging on the Phase One trade deal during his first term.