First, the agreement requires that China begin to buy what the administration says will be worth $ 200 billion in US crops and other exported goods and services. These purchases should increase exports from the United States to China, which, on equal terms, would promote growth.
Second, and perhaps more importantly, administration officials seem to have the agreement to revive business investment in the United States, which has fallen in recent quarters after an increase in the first half of 2018. The uncertainty that Mr. Trump and the Chinese sowed As they imposed increasing tariffs on others’ imports, he was largely to blame for that slowness, many companies and economists have said.
The bullish case for the agreement with China is that it will alleviate that uncertainty. Some economists say that U.S.M.C.A. I could do the same. For months, administration officials have promoted a study by the United States International Trade Commission that predicted that the North American trade agreement could increase growth by 0.35 percent, largely by reducing the uncertainty about the digital services trade.
Andrew Hunter, a senior US economist at Capital Economics, backed that assessment on Tuesday. “The gap that opened last year between investment and corporate earnings suggests that tariff uncertainty has caused companies to delay” investment plans, he wrote in a research note. He added: “With the US M.C.A. signed agreement and the threat of new tariffs on Chinese products seemingly off the table, that drag should now be disappearing.”
Many economists have praised the agreements to reduce uncertainty, but few have raised their growth forecasts due to them. This is partly because they say the agreements still leave a large amount of tariffs in force, particularly those against China, but also on some steels, aluminum, solar panels and washing machines imported from other countries.
They also pointed out that Trump had waged his trade wars on fronts well beyond North America and China. This year, new commercial battles arise, including one between the United States and France for a French impulse to impose a new tax that affects US technology giants such as Google and Amazon.
Mary Lovely, a member of the Peterson Institute for International Economics, said the Phase 1 agreement was “good news for the United States and the world economy.” But, he said, “there is still considerable uncertainty for companies that use China as a platform for products destined for the US market, and we will continue to see the impact of this on a slower investment and higher commercial costs.”