It is too early to give a final assessment of the U.S.-China trade deal, the details of which have just been published, but it’s not too soon for a provisional opinion: China is badly shaken, and American credibility has been greatly enhanced.
Some parts of the deal probably won’t matter much. First, taking away the currency manipulation charge is a non-event, and to the extent China was manipulating its currency, it was keeping it up, not down. Second, it is fine that China agreed to respect more intellectual property rights, but that can be hard to enforce and in any case China has been headed in that direction. Third, it is good that China is opening further to U.S. financial services, but that is a marginal change.
In general, I am suspicious of detailed agreements when one of the parties claims the other does not respect the terms of their deals, as the United States does with China. If the U.S. holds up its end of the bargain and China doesn’t, you have to wonder what all the trouble was about.
So what about the potential benefits for the U.S.? Most of them concern credibility.
The U.S. has established its seriousness as a counterweight to China, something lacking since it largely overlooked China’s various territorial encroachments in the 2010s. Whether in economics or foreign policy, China now can expect the U.S. to push back — a very different calculus. At a time when there is tension in North Korea, Hong Kong, Taiwan and the South China Sea, that is potentially a significant gain.