It was supposed to be the "big one." Remember those photos from January 2020? You had President Donald Trump and Chinese Vice Premier Liu He sitting in the East Room of the White House, pens in hand, signing a massive stack of papers. This was the America China trade agreement, or the "Phase One" deal as everyone called it back then. It felt like the end of a long, exhausting boxing match. People were tired of the tariffs. Markets were jittery. Honestly, we all just wanted to know if the price of electronics and soy was going to stop swinging like a pendulum.
But then the world broke.
COVID-19 hit weeks later, and suddenly, a trade deal about aircraft and soybeans felt like a relic from a different century. Yet, that document still exists. Its legacy is still messy. If you're looking at the current economic landscape, you can't really understand why we're still in a "cold" trade war without looking at what that agreement actually did—and what it failed to do.
The Massive Math Problem in the America China Trade Agreement
The core of the deal was basically a giant shopping list. China committed to buying an additional $200 billion worth of American goods and services over a two-year period, specifically compared to 2017 levels. We're talking manufactured goods, energy products, agricultural stuff, and services. It was an ambitious number. Some economists at the time, like Chad Bown from the Peterson Institute for International Economics (PIIE), were skeptical from day one. They were right to be.
The math just didn't hold up.
China was supposed to buy about $22.7 billion in U.S. farm products in 2020 and $31.2 billion in 2021. Did they? Kinda. They bought a lot of corn and pork, mostly because their own pig populations were being decimated by African Swine Fever. They needed the food. But they didn't hit the total targets. Not even close. According to data tracked by PIIE, China eventually bought only about 58% of the exports it committed to under the America China trade agreement.
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You can't blame it all on the pandemic, though that's the easiest excuse. Supply chains were wrecked, sure. Freight costs went through the roof. But there was also a fundamental mismatch between what the U.S. could produce and what China was willing to pivot toward. Trade isn't a faucet you just turn on and off. It’s a complex web of private contracts, and the Chinese government couldn't necessarily force every private firm to buy American when Brazilian soy was cheaper or more available.
Why the Tariffs Never Actually Left
Most people assume that when you sign a trade deal, the "war" part ends. That didn't happen here. The America China trade agreement was essentially a truce, not a peace treaty. The U.S. kept tariffs on roughly $250 billion worth of Chinese imports. In return, China kept its own retaliatory tariffs on U.S. goods.
It was a "pay to play" scenario.
If you're a small business owner in the Midwest or a tech startup in California, you've probably felt this. The tariffs are still there. Even as the Biden administration took over, they didn't just scrap the deal or the taxes. Why? Because the tariffs became leverage. They are the "stick" in a world that is increasingly skeptical of "carrots."
The U.S. Trade Representative (USTR), Katherine Tai, has spent years reviewing these actions. The consensus? China didn't move the needle on the structural stuff. We’re talking about intellectual property (IP) theft, forced technology transfer, and the way the Chinese state subsidizes its own companies. The Phase One deal touched on IP—it actually had some decent language about trade secret protection—but it didn't solve the "State Capitalism" problem.
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Intellectual Property: The Win Nobody Talks About
While the purchase targets were a flop, the America China trade agreement actually made some quiet progress on legal frameworks. China agreed to stop requiring U.S. companies to hand over technology as a condition for doing business there. They also promised to beef up their own courts to handle patent disputes.
For a company like Apple or a pharmaceutical giant, this mattered.
It wasn't perfect. It was mostly "on paper." But in the world of international law, "on paper" is the first step toward "in practice." China did pass some new laws and judicial interpretations that aligned with the agreement. However, if you talk to experts at the U.S. Chamber of Commerce, they'll tell you the enforcement is still spotty. It’s like having a speed limit sign but no police officers on the highway. You know the rule, but you only follow it if you think you'll get caught.
The Reality of 2026: Where Do We Stand?
We are now years past the expiration of the original two-year purchase window. The America China trade agreement is effectively a ghost. It isn't being actively "enforced" in terms of those $200 billion targets because everyone knows those ship have sailed.
What we have now is a "New Normal."
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This new reality is defined by "de-risking." It’s a buzzword, I know, but it’s accurate. Companies aren't waiting for another trade agreement to save them. They are moving factories to Vietnam, Mexico, or India. The trade agreement proved that the relationship between the world's two largest economies is too volatile to rely on a single piece of paper.
- Trade is still happening: We still trade hundreds of billions of dollars every year.
- Decoupling is selective: We are pulling apart in "sensitive" areas like chips and AI, but we still buy Chinese toys and furniture.
- The Agreement is a Benchmark: It showed what doesn't work—specifically, "managed trade" where you set arbitrary dollar amounts for purchases.
Common Misconceptions About the Deal
One big mistake people make is thinking the trade war "lost" or "won." It's not a football game.
Some argue the America China trade agreement was a failure because the trade deficit didn't vanish. Newsflash: trade deficits are mostly about macroeconomics and how much Americans save versus how much they spend. A trade deal rarely changes that.
Others think the deal was a total victory because it forced China to the table. In reality, it was a draw. China got to keep its industrial model mostly intact, and the U.S. got to keep its tariffs while showing its domestic voters that it was "getting tough."
Actionable Insights for Moving Forward
If you are a business owner or an investor trying to navigate the remnants of the America China trade agreement, you need to stop waiting for a "Phase Two." It’s not coming. Instead, focus on these realities:
- Tariff Engineering is Essential: Don't expect the Section 301 tariffs to disappear. If your margins can't survive a 25% tax, you need to find a new source or apply for specific exclusions through the USTR.
- IP Protection is on You: While the agreement improved Chinese law, you still need to register your trademarks and patents in China before you enter the market. The "First to File" rule is still a major hurdle.
- Watch the "Dual-Use" List: The focus has shifted from soybeans to semiconductors. Even if a product isn't covered by the old trade agreement, it might be restricted by new export controls.
- Diversify your Supply Chain: The biggest lesson of the last few years is that "China Plus One" is the only safe bet. You don't have to leave China, but you can't only be in China.
The era of big, sweeping trade deals between Washington and Beijing is likely over. We are moving into an era of targeted strikes, specific subsidies (like the CHIPS Act), and constant negotiation. The America China trade agreement was the end of the beginning, not the beginning of the end. It taught us that buying things is easy, but changing how a country operates its economy is nearly impossible.
Keep an eye on the USTR's annual reports on China’s WTO compliance. They provide the most honest, if somewhat dry, assessment of whether the promises made in 2020 are being kept today. The landscape is shifting toward security over efficiency. That's a huge change for global business, and it started with the realization that a few hundred billion dollars couldn't buy a stable relationship.