Essay Sample on US-China Trade Deal: What's Really in It?

Introduction

Every Economy around the globe is striving to be stable by putting more efforts into resolving macroeconomic issues that keep emerging in both perceived strong and weak economies. In this regard, President Trump, on October 11, 2019, announces the biggest deal ever made between the US and China. The article titled, "What is Really in the Trade Deal Trump Announced with China," published by Ana Swanson and Keith Bradsher on October 15, 2019, detailed the deal. The original piece of the pact was a commitment by China to buy between $40 and $50 billion worth of American Agricultural products annually. Trump signed this agreement in efforts to manage economic supremacy battles between the US and China, which would, in turn, help maintain the trade cycle and economic growth. Concerning this agreement, critical analyses on the implication of the deal to trade cycles and economic growth of the US agricultural sector become the area of focus.

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Trade Cycles is the periodic fluctuation of economic or business activity levels over trade periods. For instance, the tendency of output and interest rates to fluctuate every financial year in a recurrent sequence. The sequential fluctuation means that the periods of good trade alternate with the periods of bad trade in terms of sales versus returns measure (Hameed, Lof & Suominen, 2017). Regarding President Trump's deal, the US is seeking to manage the trade cycle in the agricultural products by allowing China to purchase approximately $50 billion worth of products every year. The trade cycle economic issue has been affecting business ties between America and China, and the Agricultural sector is the most prominent victim between 2016 and 2018. The trend extended to influence economic growth because the sector's output declined periodically until today.

Importantly, American officials are not specific on which Agricultural products they are going to transport. For this reason, many analysts are reporting that the level of exports reported in the agreement seems hard to achieve. Interestingly, the President acknowledged that disparity but was not clear the way forward. The gap makes the deal as reported in the article the main critique because if the sector by 2017 exported only $24.3 and much worse in 2018, shipping second this year will be hard.

President trump's government has good intentions in restoring the drastic fall of the quantity of exported Agricultural products. This initiative to revive trade union with China is not only a solution to end economic supremacy wars but also to manage trade cycle and economic growth issues. However, the practicality of the agreement is questionable, considering the performance of the sector in the recent past. It is only realistic that the improvement for output exported yearly be at the gap equal to the amount with which the fall occurred. For instance, in 2016, the export was at $25.5 billion, and it dropped to $24.3 billion in 2017 and subsequently with the same amount in 2018. Practically, the rise should start gradually with the same amount or slightly more.

Conclusion

In conclusion, the article depicts the attempt of the US federal government to solve major macroeconomic issues affecting its Agricultural sector. In this case, in efforts to manage trade wars between China and the USA, the government has the two macroeconomic problems that will have solutions with success to the deal. However good this deal is, the government must look into its practicality, and therefore it should take the deal as a gradual process and achieve it in 15 to 20 years. The approximation of that time limit is practical while taking the drop-in exports at $1.2 billion as the growth rate amount.

References

Hameed, A., Lof, M., & Suominen, M. (2017). Slow trading and stock return predictability.