Donald Trump’s top economic adviser has said that China’s purchases of $200bn in US products under the “phase one” trade agreement could be delayed because of the coronavirus outbreak, even though he projected that the crisis would have “minimal impact” on the US economy.
In an interview with Fox Business Network on Tuesday, Larry Kudlow, director of the White House’s National Economic Council, said that the “world is not Wuhan province” — a reference to the city of Wuhan in Hubei province, where the outbreak originated — and the hit to US economic growth would be in the range of “two-tenths of 1 per cent” in the first quarter.
However, he conceded that the Chinese purchases of US goods and services from manufacturing to agriculture and energy, which were a core feature of the trade truce struck by Washington and Beijing last month, might proceed at a slower pace.
“It is true the trade deal, the phase one trade deal, the export boom from that trade deal will take longer because of the Chinese virus,” Mr Kudlow said.
The deal between the US and China is scheduled to take effect on February 14 and mark a commercial detente between the world’s largest economies, which had sparred with escalating tariffs since early 2018.
The scheduled Chinese purchases, worth $200bn over two years, were already considered ambitious by many economists. Expectations that the targets could be met dimmed further given the hit to demand in the Chinese economy that has resulted from the coronavirus.
Nevertheless, the office of Robert Lighthizer, US trade representative, said on Monday that it had “not received any requests from China’s government to discuss changes in China’s purchase commitments due to the coronavirus outbreak”.
The US had warned that if China did not meet its commitments under the deal, it could move to reimpose punitive tariffs against Beijing.
The agreement does contain a clause allowing for consultations between the countries to discuss the impact of an unanticipated external shock, like a natural disaster, on the agreement.
Wilbur Ross, the US commerce secretary, sparked controversy last week by saying that the virus could speed up the return of jobs to the US, suggesting that the Trump administration believed it could benefit from the disease.
Mr Kudlow echoed those comments on Tuesday. “It sounds like the world has stopped. The world hasn’t stopped. We’re a very vibrant economy in the USA. And, incidentally, this may spur some business investment in equipment,” he said.
Source: Economy - ft.com
