The “Trade Deal” is Hilarious
There’s no third party enforcement or oversight of whether the two sides are meeting their obligations.
S E E D E D C O N T E N T
Joshua M. Brown, CEO Ritholtz Wealth management
There’s no third party enforcement or oversight of whether the two sides are meeting their obligations. Basically, it’s just political cover.
The market doesn’t care. Stocks wanted a resolution and this will do for now.
Here’s Ethan Harris and the BofA Merrill US Economics research team:
The more interesting part of the deal is China’s agreement to dramatically increase imports from the US. China is tasked with increasing agricultural, manufacturing, energy and services by more than 50% this year with another sharp increase in 2021. We remain skeptical that China can hit these targets.
The deal claims that the “purchases will be made at market prices based on commercial considerations and that market conditions…may dictate the timing of purchases.” It is hard to reconcile these very aggressive quotas with the idea of buying at market prices.
Source:
The US-China deal: A “big, beautiful monster”?
Bank of America Merrill Lynch – January 16th, 2020
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What happens if China falls short of the targets? The enforcement mechanism allows both sides to judge for themselves whether they are meeting the spirit of the agreement.
What would happen if we hadn't even taken a first step to correct the massive trade imbalance? Shall we just hope that they will emulate us? Or maybe it's because Donald Trump is the only President who is trying to fix this mess?
The worst 2 years since 2006 have been 2018 & 2019.
That's IN SPITE of the Tarrifs.
He really could not have made it any worse.
Old news now the trade deficit with China is the lowest in three years.
Imports fell 1% in November following U.S. tariffs on consumer goods, contributing to 8.2% contraction in trade deficit
That is your opinion and a predictable one at that.
That's IN SPITE of the Tarrifs.
That's BECAUSE of the Tarrifs. Things improve once the other side agrees to a more equitable deal, not while tarrifs are in place.
Why would China care about Tariffs that Trump charges American businesses with. Or are you like Trump and actually believe that China pays the tariffs?
China has other countries that have come forward and picked up the slack any tariffs have caused.
One month? Really Dean?
Really? Have the Tariffs dampened American consumption? No.
And we American importers pay the tariffs and pass it on to the consumers.
We simply cannot flip a switch and double the pre tarif agriculture exports and
increase the energy exports from 5 billion to 50 billion because it's a neat idea.
btw because unemployment is so low ( is it really?) we are going to have a hard time building up the infrastructure
to export goods, energy and food.
but that's just me being predictable.
Trump is putting tariffs on American businesses? You need to explain that one.
The people who purchase Chinese products will pay them. It makes American products much more attractive. The fact that you are ignoring is that American businesses have been at a disadvantage with China for long, long time.
China has other countries that have come forward and picked up the slack any tariffs have caused.
You wish! No, there is no picking up slack in place of the American market.
Trade with America will have to be fair. The world is changing.
Fairness: impartial and just treatment or behavior without favoritism or discrimination.
CORRECTION: The AMERICAN people and companies that purchase Chinese products will pay these taxes (tariffs).
Like American steel? Then how come Trump's great southern wall is using Chinese steel?
The fact is that you are showing a complete ignorance on American/Chinese trade, just like Trump is.
Trump’s Trade War With China Makes Russia Great Again
DONALD TRUMP'S TRADE WARS ARE BRINGING RUSSIA AND CHINA TOGETHER, MAKING IT EASIER FOR THEM TO CHALLENGE U.S.
Trump’s Trade War Is Making Russia and China Comrades Again
that is rather "progressive" of you given the history of greed in human beings which is unfortunately
well, well documented.
Fair, indeed.
Got a link for that?.............or is it just another "But Trump"
This was about restoring confidence and calming markets with the campaign heading into the final stretch. Getting something written down on paper. Mission accomplished as the S&P 500 cruises toward an opening around 3300 as of this blogging…
"There’s no third party enforcement or oversight of whether the two sides are meeting their obligations."
The U.S. doesn't know how to "Enforce" their own "BINDING Deals" ?
"Harris concludes that China is almost certainly going to fall short of these targets for purchases of US goods in year one"
Ya think ?
This "Idiot" (Joshua M. Brown) thinks this is another "Non-Binding" Iranian deal, that needs inspectors (which don't do their jobs anyway).
Correct!
Did this Epiphany come to you in just the last 3 years, or from Decades of "Other's Actions/Non-Actions ?
Did this Epiphany come to you in just the last 3 years, or from Decades of "Other's Actions/Non-Actions ?
Epiphany?
Nope. Hardly an "Epiphany"...
I've known it for years.
For years I've seen the Chinese go back on their word, and therefore don't have any reason to expect they will change now.
(And for that matter, I've known that the same is true with the North Koreans when they make deals...they also regularly break their agreements..).
soooooo.…. in those Past years....which one actually "Face-to-Face Forced" something more than "Word Salad" from China ?
Nope. Hardly an "Epiphany"...
I've known it for years.
For years I've seen the Chinese go back on their word, and therefore don't have any reason to expect they will change now.
(And for that matter, I've known that the same is true with the North Koreans when they make deals...they also regularly break their agreements..).
The French have an expression that accurately describes the behaviour of the Chinese and the North Koreans re: the deals they make:
Plus ça change, plus c'est la même chose
that probably applies to how the US treats it's own native Americans, but I digress...
The important thing is that third party oversight and enforcement was removed. The money grubbers in the financial sector have been deliberately excluded and have no say. The power of brokers to take a skim off trade has been reformed.
Gee, I must have missed when Trump said that was a goal of the tariffs he imposed on the American people. Will that offset the billions in loses caused by those tariffs?
Only those buying Chinese made goods are affected by the tariffs. There aren't any tariffs placed on American made goods.
But free trade, supply-side, Kissenger politicians have killed American manufacturing so the consuming public doesn't have that option. The consuming public can't avoid tariffs by buying American made goods because political Washington has killed domestic manufacturing to obtain political donations. That's not President Trump's fault.
Democrats have been very vocal in their opposition to changing the free trade, supply-side, Kissenger status quo. That isn't President Trump's fault, either.
Free trade is part of the GOP platform.
Supply side:
Kissenger politicians:
Sounds like Trump policy.
Bullshit. Capitalism killed domestic manufacturing.
Are the tariffs Trump's 'fault'?
Didn't the Democratically controlled House just pass the USMCA?
Trump's USMCA and the China trade agreement was gonna change all that right? Are you saying that Trump's negotiated MORE bad deals?
Politics....rules and regulations...… Killed manufacturing.
"Didn't the Democratically controlled House just pass the USMCA?"
They signed ....no " Work " Required (Just another Liberal Hate it before they didn't) !
I'm sure you think ….. "Democrats" did the work.
Au contraire:
Sounds like China is screwing their own citizens.
Yep right along with shitty domestic Unions and cheap non-domestic labor.
Every American who likes and buys those cheap goods is culpable in that regard. Every one.
Yep !
Even with the "Tariffs" though....it's still cheaper to buy "Made in China" !
But....."Liberal Types" used to tell us....."a few cents more, doesn't hurt anyone, if it's for their "Good" Idea.
How soon they forget.
Is that a recent "Epiphany" you just had?
Because the fact of the matter is that they've been doing that for years!
Whoooooosh !
Think about what the "Left" says about Trumps tariffs on Chinese products, and then think about how they speak about China putting Tariffs on U.S. Goods, as they are used against Trump by the "Left".
The supply chain of almost every manufactured good in this country includes some part produced in China. I don't think that there is one car manufacturer that doesn't include parts from China. Same for most electronics, including the computer or phone you typed your comment on.
It’s nice that we finally agree on something
Sharing in the 'culpability'?
All, means all. The only way to assure one escapes that set is to consume nothing manufactured by man.
”We have met the enemy and he is us”
- Pogo
Well that a bit hyperbolic but it ain't easy finding 'American made' that is ACTUALLY American made. Add to the fact that 'American made' doesn't mean quality or affordability.
If the only choice is between being 'culpable' and being able to put clothes on your kids backs and shoes on their feet, I think most parents will choose 'culpability'.
We agree on that but then again I’m not the one that’s claiming “Capitalism” ruined manufacturing in the US.
Lower cost labor in other countries was largely responsible for that. That along with a less friendly business environment in much of the US and Union labor that refused to assimilate and hold its membership accountable.
I hear Unions are not much of an issue yet in China ...
Are you claiming that manufacturers going to countries with lower labor costs to make a higher profit isn't a principle of Capitalism? On what planet?
Trump is eviscerating the EPA so manufacturers can pollute at will and make the planet uninhabitable for human life. But no worries, there'll be bigger profit in the mean time.
Assimilate to WHAT and responsible for WHAT exactly Sparty?
Guess that's why their minimum wage is about $2 an hour. Even considering the fact that their cost of living is half of the US, that's poverty wages.
BTW, no unions = NO overtime.
Most worker protections aren't an 'issue' in China, unless of course you are a worker in China. Then it's a big fucking issue.
No, my point was clear. It’s hypocritical to rail on Capitalism causing that problem while one continues to purchase the cheap products made in places like China with cheap labor.
Horsepucky! Regulations were lowered in some cases but the EPA remains one the more powerful agencies in the Fed with copious rules and regulations remaining to protect the environment.
China? Not so much and one more reason it’s cheaper to manufacture in China and not the doing of Capitalism.
Assimilate to the times Dulay. This isn’t the 50’s and things change. I’ve been directly involved with unions for over 40 years now. Union management is RESPONSIBLE to their membership and need to negotiate in their best faith not that of management. That didn’t happen in many cases in the past and is part of the reason union membership has been on the decline for decades.
Lol, you appear think I’m defending the way things are in China and nothing could be further from the truth. Yeah, there are a lot of reasons things are cheaper to make in China. No unions, lower wages and less regulation to name a few but none of that is Capitalisms fault either.
Not everything is the USA’s fault
That's not capitalism, that's mercantilism. What you are describing is the idea that trade generates wealth and must be protected by government. The East India Company was a model of mercantilism and not a model of capitalism.
Many proponents argue that people do not understand socialism. It seems the same ignorance applies to capitalism.
Regulations have been lowered on trade. The United States has forfeited its national sovereignty to advocate and advance trade. Why doesn't EPA regulate the environmental impact of trade? Protecting the environment of the United States by allowing foreign exporters to wreck their own environment is NIMBY regulation. The United States gets the cheap manufactured goods while foreign countries suffer environmental degradation.
EPA has not accomplished anything. EPA has only shifted the environmental costs offshore. Protecting the environment of the United States by forcing other countries to wreck their own environments is phony environmentalism. EPA depends upon free trade to remain relevant. Arguing about EPA regulations is a distraction.
No it isn't. AMERICAN companies moved their manufacturing to countries with lower labor cost for higher stockholder dividends and profit margins. That's Capitalism.
Quantity doesn't equate to quality Sparty. Trump has deregulated the fuck out of the Clean Water and Air act.
Secondly, rules and regulations are only as strong as the 'cop on the beat'. Trump has eviscerated the EPA's budget. Without PEOPLE to take samples, do inspections and conduct investigations. the EPA is toothless and THAT is Trump's goal.
Yet neither the China trade deal or the USMCA address that issue. Wonder why?
So your posit is that Unions are part of the reason why manufacturing was ruined in the US BUT insist that Union management should negotiate in the best interest of their membership, NOT the manufacturer. That sounds contradictory.
You appear to be seeing things.
Yet it IS a principle of Capitalism to take advantage of those factors.
Where did I say ANYTHING was the USA's fault Sparty?
Lol, the US can’t force a sovereign nation to do anything it doesn’t want to do itself. And if it does happen by their own choice, not our problem no matter how much some might want to make it so.
Hopefully we never do something like going to war to stop another sovereign nation from say polluting its own land. Honestly, I can see some progressives wanting to do something like that to “save” that country from itself.
Yes it is. Buy American or stfu about it. If you don’t stfu about it you are just another big fat hypocrite.
And for lower labor costs .... right? Which lowers to cost of the end product right? Curious that you gravitate only to the evil corporations and their shareholders.
Not
Over-regulation isn’t the answer either. The EPA ran amuck with during Obama’s 8 years. Much of what’s been modified since mediates that a little.
Have you ever been involved in union negotiations? I have and yes that is exactly what is suppose to happen. Both sides negotiate and compromise where they can. Things are usuallychanged every negotiation that don’t relate to wage, benefits or conditions. Either side is too uncompromising and negotiations break down. Nothing is accomplished for either party.
Nope
True, Capitalism rocks that way but it still, in and of itself, forces nothing either way. Free choice is like that.
Where did I say YOU did?
Nope. One isn't a hypocrite by decrying the adverse effects of Capitalism and still buying the ONLY products available within one's price range.
The difference between your position and mine is that I blame the profiteers and you blame the average joe who has no fucking choice.
Not necessarily.
Curious that you gravitate to the profit margin of 'evil corporations and their shareholders' rather than acknowledging that they are the ones choosing where to manufacture products and not to employ Americans or pay them a living wage.
You're also assuming that just because a product is made in China or Mexico, that the reduction in cost of that product is reciprocal. It isn't. That's where Capitalism come in.
Then there's another principle of Capitalism. Businesses get to choose WHAT to sell.
Walmart chooses to sell 'cheap products from China' and elsewhere and their uber wealthy owners become richer and their shareholders cheer. Walmart could change all of that. Hell, they could afford to build factories all over the country to product whatever the fuck they want.
Seriously, why pretend that you know what Trump has deregulated or care.
The Clean Water and Air acts aren't Obama inventions Sparty. They're from 1972 and 1963 respectively. Trump is attacking the original provisions of those acts.
Actually yes, on both sides, as a member and as a member of management.
Your prior comment still looks contradictory.
While it may not 'force' anything, it enables and excuses a ton.
Nope, it's still being a hypocrite but if it helps you to say that its not .... go ahead, knock yourself out.
Lol i am an average Joe who worked his butt off to get ahead but it is true. I don't blame the innovators. The ones taking a risk and hanging it all out on the line for a chance at success. The ones working endless hours, not a 40 or less hour per week with overtime if working more than 40 or 8 a day. The ones who create jobs. Why would i blame them unless i'm full of sour grapes for their success?
Yeah, i'm one of those evil profiteers who worked his ass off to help build a company. Nothing better than working for yourself i'll tell you but its not for everyone and it ain't easy. Its a lot of work. An amount of work few are willing to put in with no promise of getting paid. Most would rather just work their 40 hour per week job, and apparently get jealous about others success or otherwise just piss and moan about where their choices left them. Nothing wrong with working a 40 hour per week job. We need a lot of folks like that but bitching about others success is a petty exercise in futility. If you aren't happy do something about it or do us all a favor and just stfu about it.
Interestingly few of those folks are around when you were working to make it all happen. They were out enjoying life after putting their 40 in, spending their paychecks, making fun of the stupid owner working all those hours and then .... presto chango ..... all that hard work pays off and some of those hourly workers get butthurt about it.
I find that hilarious actually. I didn't at first but i do know. I've learned that people who are prone to sour grapes like that, will never be happy. Its always someone else's fault. Never their own.
They tend to be unhappy people, always will be likely.
Are they the ones moving their production to China Sparty.
When you're done moving the goal posts get back to me.
Don't blame me because you keep missing field goals and extra points.
Stop blaming the goal posts and put the blame where it belongs .... on the kicker .....
Yes-- and that's exactly what he is telling us.
If the deal were to be enforced, its actually a pretty good deal (as a first step).
But what Josh Brown is telling us is that even a "good deal" doesn't mean anything if its not enforced.
There's no enforcement mechanism here.
And based on past experience with deals with the Chinese, its obvious that they have a persistent pattern of not doing what they promised to do.
Who says the deal won't be enforced? Placing oversight into the hands of those with a third party vested interest undermines the idea of enforcement for national interests. Third party arbitrators are motivated by their own vested interests.
But there is an enforcement mechanism: tariffs and embargoes. Third party arbitration won't be allowed to undermine real enforcement of the deal. Third party enforcement depends upon both the United States and China conforming to that enforcement. China doesn't have a great track record. And the United States won't be blocked from imposing tariffs and embargoes to enforce the agreement.
Precisely. Third party enforcement hasn't prevented China abrogating past deals. Third party arbitration has only tied the hands of the United States. Now the United States is free to enforce the agreement with tariffs and embargoes that third party arbitrators would have blocked. Sanctioning China won't protect the United States' marketplace.
"Now"?
Trump has said that nothing re; the tariffs has changed-- the tariffs that have currently been on for a while now will neither be increased nor decreased...and no new tariffs will be put on.
In the past the Chinese have gone back on their promises-- despite the tariffs. Since there will be no new tariffs-- What makes you think the Chinese have suddenly reformed their evil ways?
Trump has also pointed out that this is a phase one agreement. The phase one agreement is about beginning negotiations. In the case of China, that's a big deal.
How would a third party enforce trade agreements between the United States and China?
"Reformed?"
How about the fact that for many people its way beyond "reformed-- because they don't pay anything at all to a broker.
Because they trade with an online site, not a conventional broker. Trades are free. (What commission have you been paying???)
I trade online so pay zero commissions on trades.
"Reformed?"
How about the fact that for many people its way beyond "reformed-- because they don't pay anything at all to a broker!
This started in October-- Schwab was first to eliminate commissions, then other brokers were forced to follow in order to compete:
OCTOBER 1, 2019 / 9:54 AM / 3 MONTHS AGO
Charles Schwab to end commissions for stock trading,
(Reuters) - Discount brokerage Charles Schwab Corp (SCHW.N) said on Tuesday it is eliminating commissions for online trading of stocks, ETFs and options
Schwab’s latest move is likely to have a knock-on effect across the sector, forcing rivals to follow suit and eliminate commissions.
The decision marks an inflection point for online brokers, as newer, nimbler rivals such as Menlo Park, California-based startup brokerage Robinhood have been capturing market share in recent years by offering commission-free stock trades.
This has forced traditional brokerages to follow suit.
Rival Interactive Brokers Group on Monday started offering commission-free, unlimited trades on U.S.-listed stocks and ETFs. And last summer, JPMorgan Chase & Co (JPM.N) also began offering free stock trades for self-managed accounts through its mobile banking app.
In your opinion-- why did Trump negotiate a deal that couldn't be enforced?
But the deal can be enforced with tariffs and embargoes. Trump negotiated a deal that is more likely to be enforced. Third party arbitration has not protected the US marketplace and domestic manufacturing in the past. The resilience and sustainability the US economy has been decimated under third party enforcement. Expecting third party arbitration to be more effective now is not a realistic expectation.
China can't hide behind the skirts of third party arbitrators with this deal. The United States is not required to seek the permission of third party arbitrators to impose tariffs.
Otherwise known as a paper tiger.
US-China Deal? Want to know what it really entails? Then check out the Trump/Kushner financial dealings in the region.