On the sidelines of the annual Group of Seven Summit in Biarritz, France, President Trump held an extremely important bilateral meeting with Prime Minister Shinzo Abe of Japan. Blindsiding the media, Trump announced on Sunday that he and Abe had agreed “in principle” to a bilateral trade deal involving agriculture and digital products.
“We’ve agreed to every point, and now we’re papering it, and we’ll be signing it at a formal ceremony,” Trump said of the deal. The formal signing of the deal is expected to happen this September at the United Nations General Assembly meeting in New York.
The trade deal with Japan will especially focus on corn, an export that has been plentifully grown but hit especially hard by Trump’s trade war with China. Japan, on the other hand, has had problems recently with growing corn and selling it to consumers because of pesticide problems. Speaking of this part of the deal, Trump said, “We have excess corn in various parts of our country with our farmers because China did not do what they said they were going to do. And Prime Minister Shinzo Abe, on behalf of Japan, they’re going to be buying all of that corn.” This means that farmers, a group who has been struggling through the US-China trade war, will benefit greatly from this US-Japan deal that will eventually open up $7 billion in products to the market.
While this is great for American producers and exporters, there is an even bigger plus that comes with the trade deal: it makes China nervous.
The Chinese are the ones who are hurting the most when it comes to this trade war. Their stocks are tanking, and their unemployment is rising. China wants the US to be dependent on Chinese products, but when it comes down to it, they are much more dependent on our purchases than we are on their exports.
We do somewhat rely on Chinese products and purchases, but this deal will alleviate some of the pain created by the tariffs aimed at China by providing another country to export to and import from. These one-on-one trade deals Trump seems to prefer are helping the US and world economy.
China must now realize they need to come back to the negotiating table before they become irrelevant because of our trade with other countries. The Japan trade deal was a big blow to China as will be the upcoming US-UK deal that will likely come after Great Britain leaves the European Union. Trump is not stupid when it comes to China. Tariffs hurt us, but with this deal–and other upcoming deals–they hurt China a lot more.
Yes, in the short-term Americans will have to eat it a little bit, but the long game is what matters, and the Chinese know they can’t survive the long game. They want to appear tough, but I can tell you that with the announcement of a US-Japan trade deal they got a bit more nervous.
-Antonio L. Jimenez