- Bearing Drift - https://bearingdrift.com -

So … About Glenn Youngkin’s Trade Deal With Communist China

The reaction to Glenn Youngkin’s nomination for Governor has examined nearly everyone except Youngkin himself. That’s understandable, given that Youngkin has almost no record in public policy and he’s essentially running as the “Not That Person” candidate (“that person” could be Amanda Chase, Ken Cuccinelli, Pete Snyder, Kirk Cox, or Terry McAuliffe, depending upon one’s point of view).

Still, there is one policy outcome for which Youngkin takes great credit [1] – the “Phase 1” trade deal Donald Trump signed with Communist China last year.

“I am the only candidate running for Virginia Governor who was thanked by President Trump for helping him stand up to China to get a better a trade deal for American workers.”

There’s only one problem with this: the deal wasn’t “better.” Indeed, the only policy outcome on the Republican nominee’s record is a failure.

In fact, the Phase 1 deal was doomed from that start, as Scott Kennedy (Center of International and Strategic Studies [2]) noted in blistering detail (emphasis added).

The United States’ trade deficit with China at the end of the Trump administration will be roughly where it was at the end of the Obama administration, at over $300 billion. Under the weight of the trade war, even before the pandemic, U.S. exports to China have stagnated or fallen in many categories, including in agriculture, energy, and high-ticket manufactured goods, such as commercial aircraft. Services exports, such as education and tourism, have plummeted. And contra President Trump’s assertion, the full burden of the Section 301 tariffs, most of which are still in place, has been borne by U.S. importers and consumers [3], not Chinese exporters.

The administration’s brinksmanship yielded the modest Phase One deal [4], which contained a range of admirable but incremental reforms akin to the kind of concessions previous administrations had obtained without the same level of disruptive rancor. It left China, Inc.—and its array of industrial policy tools—fully intact. Equally problematic, the deal’s highlight, the $200 billion purchase agreement, was a disaster: it endorsed managed trade and Chinese state interventionism, all the while setting unrealistic targets [5] that China predictably never came close to meeting [6].

In other words, the Phase 1 deal did nothing to address the systemic problems imposed by the Chinese Communist Party while promising American exports that were never going to happen.

Moreover, the Phase 1 deal was the culmination of Trump’s hideously mistaken trade policies: his endless war on accounting [7], his refusal to engage with allies [8] regarding the CCP, his lust for tariffs [9] that never end, etc. As Chad Brown (Peterson Institute for International Economics [10]) put it…

The phase one agreement was never the long-term fix to what ails the US-China trade relationship. But attempting to manage trade with purchase targets and an intention to reduce the bilateral deficit is the wrong approach. It distracts from the engagement necessary to address the costly incompatibilities of the Chinese economic system with the more market-oriented economies of the United States, European Union, Japan, and other like-minded countries.

Yet, this was the policy issue for which Youngkin attached himself to Trump –  because he had no other way to establish his bona fides with the Trumpenproletariat.

Over on Earth 2, the idea of a trade war becoming an issue in the race for Virginia Governor would be laughable. Unfortunately for Virginians, the Republican Party chose a political rookie with almost no public record in policy at all. As such, the one policy matter where Youngkin does have a record comes to center stage.

If the Phase 1 deal is any indication of what Youngkin considers a success, Virginians need to ensure his campaign for Governor does not succeed.