Trump just ran a two-year trade war experiment. It failed.

Why free-traders should celebrate Trump's "phase one" deal with China

President Trump and Liu He.
(Image credit: Illustrated | Win McNamee/Getty Images, Omelchenko Andrii/iStock, Aerial3/iStock)

Fans of free-market capitalism, you have reason to rejoice. Break out those green Adam Smith neckties hanging in the back of your closet. Party like it's 1999 — or, even better, 2000 when the internet-fueled Nasdaq hit a record high of 5000 and the U.S. normalized trade relations with China.

The cause for celebration today is President Trump signing a "phase one" trade deal with China. After two years of back-and-forth tariffs that marked the world's worst trade conflict in a century, Beijing and Washington have reached a historic agreement that accomplishes ... not so much, really. It doesn't create balanced trade between the United States and China. It doesn't disentangle the two mega-economies. And it doesn't force China to alter its "state capitalist" economic model built on central planning and subsidies. China doesn't even concede that it has a history of forcing American firms to hand over their technology.

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James Pethokoukis

James Pethokoukis is the DeWitt Wallace Fellow at the American Enterprise Institute where he runs the AEIdeas blog. He has also written for The New York Times, National Review, Commentary, The Weekly Standard, and other places.