U.S. President Donald Trump is getting a crash course in the realities of a globalized economy, and he is learning some early lessons that may preclude a real "crash" in the not-too-distant future. The man who declared that trade wars are "easy to win" is discovering that such victories are less cut-and-dried and the collateral damage may prove extensive.
The most recent example of the education of Trump was evident last weekend when U.S. and Chinese negotiators announced that their two governments had reached agreement for China to buy more goods and services — including "meaningful increases in United States agriculture and energy exports" — to "substantially reduce the United States trade deficit in goods with China," a deficit that last year reached $375 billion. The statement was brief — it included no specific deficit reduction target — and noted that Washington would send a team to China to fill in details.
U.S. Treasury Secretary Steven Mnuchin said the deal was "a framework" for economic relations, adding that the two sides had agreed on specific targets for individual sectors. For example, he anticipated "a very big increase, 35 to 45 percent increases in agriculture this year alone," along with "$50 [billion] to $60 billion a year of energy purchases over the next three to five years," which would constitute a doubling of energy purchases. This was enough, he noted, to put a looming trade war "on hold."