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The ‘phase one’ trade deal, signed between the United States and China in January 2020 following nearly two years of tit-for-tat tariffs and tensions, failed to achieve any of its stated objectives, according to new research.

In its recent Realtime Economic Issues Watch report, the Peterson Institute for International Economics (PIIE), a US think tank, finds that China bought none of the additional US$200mn of US goods and services that were promised as part of the agreement.

Under the terms of the pact – heralded by then-President Donald Trump as “the biggest deal anybody has ever seen” – the Asian nation was to accelerate its purchases from the US from the 2017 baseline of US$186bn. For manufactured goods, the deal pushed China to purchase and import “no less than US$32.9bn above the corresponding 2017 baseline amount” in 2020, and “no less than US$44.8bn above the corresponding 2017 baseline amount” in 2021. China also agreed to buy a further US$52.4bn-worth of energy, US$32bn of agriculture and US$37.9bn in services.

“In the end, China bought only 57% of the US exports it had committed to purchase under the agreement, not even enough to reach its import levels from before the trade war,” says the PIIE report, adding: “China was never on track to meet any of the additional purchase commitments.”

Manufacturing was the most economically significant part of the deal, making up 44% of US exports covered by the deal in 2017. According to the report, China purchased only 59% of the full commitment of US-manufactured products in the 2020-21 period – and a deeper dive into the numbers demonstrates how this figure could have been even lower if it weren’t for the Covid-19 pandemic.

Exports of medical supplies boomed, reaching 134% of the target, which was set prior to the first case of the virus being reported. US exports of semiconductors and manufacturing equipment also accelerated, hitting 129% and 145% of the target respectively, due in part to increased demand for chips needed for consumer electronics and data servers brought on by the pandemic-related shift to remote work.

The performance of the manufacturing subcategories that had dominated US exports before the trade war – namely autos and aircraft – was markedly less stellar. Of the promised US$17.3bn-worth of imports of US autos, trucks and parts, China purchased just US$6.6bn by 2021, or 39% of the target. Aircrafts, engines and parts fared even worse, with China buying just 18% of the target.

The results come as little surprise. At the time of the signing of the deal, Gregory Daco, chief US economist at Oxford Economics, told GTR that the target would represent “more than a doubling of US exports to China, which could pose a difficult threshold to achieve without trade diversion”, adding: “China has long stated it wants its imports to reflect final domestic demand, while US exporters would struggle to meet those ambitious targets.”

The PIIE report finds that the phase one deal did little to reduce the uncertainty discouraging the business investment needed to restart US exports. “Most of Trump’s tariffs remained in effect, especially on inputs, raising costs to US companies. And by failing to negotiate the removal of China’s retaliatory tariffs, the agreement may have funnelled any Chinese demand for US exports away from China’s private sector toward its state-owned enterprises,” it says.

The deal, however, was not a total disaster, the report says. It did bring an end to the trade war, and China did stick to its commitments to remove technical barriers to US farm exports, respect intellectual property, and open up its financial services sector.

However, PIIE concludes, the agreement was “problematic, if not unrealistic” from the start.