Kudlow sees virus delaying phase one deal export boom

Marco Green
February 5, 2020

The mainland corona virus outbreak is likely to have some impact on USA supply chains, but the impact is unlikely to be catastrophic, White House economic adviser Larry Kudlow said in an interview with Fox Business network.

Larry Kudlow told a Fox television program on Tuesday that an expected export boom from the US-China trade deal "will take longer" because of the fast-spreading virus.

Last month, the US and China signed a partial "phase one" trade agreement, reaching a deal that both addresses intellectual property protection and China's increased purchase of USA goods while also easing almost two years of tensions between the world's two largest economies. "Days ago, we signed a groundbreaking new agreement with China that will defend our workers, protect our intellectual property, bring billions of dollars into our treasury, and open vast new markets for products made and grown here in the U.S.A".

President Trump has placed importance on boosting American exports in order to gain support from farmers for his reelection.

The deal envisioned that China would increase purchases by $76.7 billion in the first year and $123.3 billion in the second year, above a 2017 baseline of imports from the United States.

The text of the agreement has a disaster clause that could be invoked, but how any delays could be resolved is not specified.

"The ongoing spread of the coronavirus is taking a toll on China's public health and economy, and may impact its ability and willingness to meet the commitments in the Phase 1 deal", the commission said.

China is a key trading partner of the United States.

However, Kudlow said he expected "minimal impact" from the virus on the United States economy. "It's not a disaster".

Trump began imposing tariffs on Chinese goods in 2018, triggering a tit-for-tat trade war that last 18 months.

Kudlow said he thought the virus outbreak could spur business investment and lead to increases in production in the United States.

Instead, WHO says that countries should simply implement policies based on evidence, and collaborate with other countries to combat the outbreak.

Pharmaceuticals probably will be affected much more.

Other reports by Click Lancashire

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