CARDIFF GARCIA, HOST:
The U.S. and China have been locked in a trade dispute since March of this year. It happened after the Trump administration released a report about China and intellectual property theft. And this report accused China of hacking into U.S. companies and stealing those companies' secrets - how these companies made their products, their design plans, their proprietary software.
STACEY VANEK SMITH, HOST:
The report said China was also requiring companies to hand over their intellectual property if they wanted to do business with China, basically leveraging access to one of the biggest, most lucrative markets in the world.
GARCIA: The report concluded that this was costing U.S. companies billions of dollars and had been for years. Now, none of this was new. Presidents Obama and George W. Bush also grappled with China on this issue. They also tried to get China to address it. But neither of them - or anyone else, really - had figured out a way.
VANEK SMITH: What was new was what the Trump administration did next. It decided to punish China by taxing Chinese imports to the U.S. on a pretty huge scale. It started with a list of more than 1,300 products, including machinery and electrical equipment.
GARCIA: Chad Bown is senior fellow with the Peterson Institute for International Economics. And he's the co-host of the "Trade Talks" podcast.
CHAD BOWN: This was a really big deal. This was a whoa moment. This is something that the United States has not done before in terms of imposing this level of tariffs against a trading partner for, you know, an - a problem like this.
GARCIA: We're stealing whoa moment for our podcast, by the way.
VANEK SMITH: I like whoa moment.
GARCIA: (Laughter) And this was actually a whoa moment for China too. China retaliated by taxing products from the U.S., including American cars and agricultural products like pork.
VANEK SMITH: And then the U.S. put more tariffs in place to counter those tariffs, and so began the U.S.-China trade war of 2018. And the numbers got really big, really fast.
BOWN: Two hundred and fifty billion dollars' worth of imports being subject to new tariffs, you know, that - that's a lot. You know, it's almost half of U.S. total imports from China in any given year.
GARCIA: This weekend, though, there seemed to be a little break in the dam - maybe. President Donald Trump was in Argentina for the Group of 20 meeting. That's this international forum of government officials from countries all over the world. And during that meeting, President Trump and President Xi of China got to talking. And now it seems like the two biggest economies in the world might be on the path to trade peace again - just maybe.
This is THE INDICATOR. I'm Cardiff Garcia.
VANEK SMITH: And I'm Stacey Vanek Smith. Today on the show, what happened at this meeting between Trump and the president of China? What will it mean for the economy? We talk trade with Chad Bown.
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VANEK SMITH: Were you, like, awake all weekend?
BOWN: (Laughter) Yeah, I was definitely awake for far too long waiting to see how this would play out. I was up very early this morning (laughter) checking to see what had happened overnight. Yeah, there's not a whole lot of sleep happening in the trade policy world these days.
VANEK SMITH: (Laughter) So then, what happened over the weekend?
BOWN: So this weekend, in Buenos Aires, the leaders of all the major economies in the world were meeting under what's called the G20. And after that meeting, President Trump and President Xi of China had a special dinner with their key team of negotiators. And apparently, over this dinner they came to an agreement.
Now, the details of the agreement are still quite murky, and they're not consistently (laughter) being reported on the two sides. Normally in an agreement like this, you would have a joint statement from the two sides making absolutely clear what it is that they had agreed to and what it is that they...
VANEK SMITH: Right, like an official statement.
BOWN: Yeah, what they hadn't agreed to as well. In this case, that wasn't true at all. There was no joint statement. And on the way back from Buenos Aires, President Trump talked about what they - he thought that they had agreed to. But then, when you read the Chinese media reports over what the agreement is, it's not quite the same thing.
So we're still left with a little bit of uncertainty as to what the details are. What does seem to be happening is - for the moment at least, is a truce, the idea that there would be no more new tariffs imposed for a period while they actually negotiate. So I think what the deal is it's a deal to try to get to a deal.
I'm not sure that they can get there in 90 days, which is, you know, I think what the Trump administration has set as its deadline before, you know, this - they would essentially start to up the tariffs they've already imposed, the last $200 billion dollars' worth of imports from China. They currently have tariffs of 10 percent on those that were supposed to get ratcheted up to 25 percent on January 1. They've put a hold on those apparently and have said, if we don't come up with a deal in 90 days, then those tariffs would get imposed at the higher level.
Ninety days seems pretty short to me. But, you know, at least they're talking. And really, they hadn't been talking seriously at all since at least, you know, May. So I think this is a step forward.
VANEK SMITH: So what is the economic impact of a detente like this? I mean, it's - from, like - from everything I've read, all these companies are, like, breathing this big sigh of relief. What does this mean?
BOWN: Well, all that it means actually is things aren't going to get worse. But to be (laughter) honest, you know...
VANEK SMITH: (Laughter) That's something, I guess.
BOWN: I guess it - yeah, it is progress. But that being said, it's also important to point out that none of the tariffs that President Trump has imposed have been removed or are going to be removed, despite all the deals that President Trump seems to be announcing, despite this deal.
So the good news for companies is that, yes, at least for the next 90 days, no new tariffs are likely to be imposed. But there's no sense that any of the tariffs that have been put on by the Trump administration or that trading partners have also put on as retaliation will be taken off.
President Trump did tweet overnight that China would be reducing their tariff on American cars that is currently at 40 percent that they imposed at that rate to retaliate against President Trump's tariffs. But, again, this is, you know, another one of these things. We haven't seen official notification of that. And until we actually see that, you know, we can't always believe necessarily President Trump's tweets.
VANEK SMITH: How big of a deal have the tariffs been on the economy? I ask because from what I've read, you know, tech - the technology sector's been really getting hit in the stock market lately. And I've read several places that one of the reasons for this is worries about tariffs and the supply chain, our - the U.S. supply chain being so connected with China. Like, is that an economic impact of the tariffs, potentially?
BOWN: So there isn't evidence yet that there's been a massively negative impact resulting from these tariffs. And part of that is because, you know, they were only relatively recently put on. We really haven't had a lot of time pass yet to see how it has shown up in the data in ways that may be affecting companies.
When you talk to, you know, CEOs and people that run these companies, what they're saying is that all of the tariffs and these threats have created an environment of uncertainty. So they're putting off decisions about, you know, where to invest, how much to invest until this gets resolved.
So it may ultimately show up through some of the investment numbers. We start seeing a lot less new investment than we might have otherwise. But I don't - it is fair to say that there actually hasn't been a massively negative impact show up in, say, prices or anything like that that we've observed so far.
VANEK SMITH: So what are you watching for now?
BOWN: Right now, I'm waiting for the details of this agreement to be made public. I'd like to see something written down that has both, you know, the Chinese government's name on it and the American government's name on it that says these are the items that we're working for and to see how that plays out over the next 90 days.
VANEK SMITH: How do - what - how do you check? Do you - are you just, like, looking on different sites online? Are you, like, watching - is there sort of the equivalent of a C-SPAN for the G20?
BOWN: There is this thing out there called Trade Twitter. You know, that's - I have found it the most efficient way to keep on top of what's going on with the Trump administration on trade policy.
VANEK SMITH: Trade Twitter - it's where it's at?
BOWN: Trade Twitter - it's where it's at.
VANEK SMITH: (Laughter) By the way, how do you find Trade Twitter? Is it just, like, hashtag Trade Twitter?
BOWN: (Laughter) Follow me on Twitter.
VANEK SMITH: (Laughter).
BOWN: I'm @ChadBown.
VANEK SMITH: You're our guide to Trade Twitter?
BOWN: I am, but I also feel as though you're an honorary member of Trade Twitter as well.
VANEK SMITH: Really?
VANEK SMITH: Well, I didn't even know this. And I am very excited to have this new, like, key into into all things trade. Well, Chad, thank you so much for talking with us about trade and China. And keep us updated.
BOWN: Thanks for having me. And anytime.
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