The trade deal merry-go-round

On Saturday Trump announced yet another trade deal with China (for some reason these deals always happen on Saturday).

But I thought I must have been hallucinating because I was sure that Trump announced such a deal at least a few weeks ago.

No, my suspicions were correct. It seems Trump announces this same sort of deal every month or so. From 2017:

March 14: Trump’s Pretty Good China Deal

April 12: Trump Says He Offered China Better Trade Terms in Exchange for Help on North Korea

May 11: Trump, China reach preliminary trade agreements on beef…

Nov 10: U.S., China Sign $250 Billion in Deals During Trump Visit

Some 2018 headlines:

May 23: Trump urges a new ‘structure’ for U.S.-China trade deal

May 29:: White House Announces Tariffs, Trade Restrictions To Be Placed On China

Nov 2: Shares soar as Trump hints at possible US-China trade deal

Nov 16: Trump raises hopes of China trade deal

Dec 1: Trump and Xi to discuss framework trade deal at G-20

Dec 29: Trump says ‘big progress’ made on possible China trade deal


March 5: President Trump and Xi Jinping Are Close to Signing a Deal But Trade War Isn’t Over

It follows a predictable pattern: Trump announces a tentative deal, within two four months the deal sours, words and threats are exchanged, and then spontaneously a new tentative deal and “progress” are announced, repeat.

Related, from The Money Illusion, by Scott Sumner The US is losing the trade war, and that’s good.

Losing the trade war means that Trump is unable to accomplish the objectives he originally set out. It’s not like losing in the sense of having your village razed and pillaged. The trade war has always been a low-stakes issue and mostly political theatre in spite of all the media and pundit hype surrounding it. It has been well over a year since Trump implemented his first round of tariffs, and inflation as measured by CPI has not budged, and economic growth, consumer spending, and profits and earnings are as strong as ever. Conveying toughness on China, even if there are no discernible results, is like throwing red meat to his base and is good enough. As long as voters are convinced that progress is being made, then results and outcomes are secondary. Trump can use the deals as evidence of such progress even if the deals keep falling through.

Scott writes:

The last thing Trump wants right now is an escalating trade war driving the US into recession. (Yes, a recession would technically be the Fed’s fault, but Trump would be blamed.)

Some call it Trump derangement syndrome, but I think it’s more like Trump reality-distortion syndrome. As discussed earlier and above, the preponderance of data shows that the trade ‘war’ is mostly media hype and has had no deleterious effect on inflation, S&P 500 profits and earnings, the labor market, consumer spending, exports, GDP, and other important economic metrics.