Unpacking the ‘phase one’ deal for the US-China trade war
President Donald Trump signed an initial trade agreement with China to avoid new tariffs and cut rates on existing ones in exchange for China’s pledge to acquire US agricultural products.
On Thursday morning, Trump expressed optimism about the deal with China. He tweeted that the US has moved closer to a trade deal with Beijing after several failed attempts..
«VERY close to a BIG China deal. They want it and so do we!»- wrote the American president.
Trump announced wide contours «first phase» deals in October, and since then both sides have traded due to specifics. «Phase one» The deal is not aimed at the major structural changes in China’s economy that Trump is seeking. The terms of the agreement include a delay in the introduction of new US trade duties of $ 160 billion on Chinese-made consumer electronics and toys, due to take effect December 15. The US also proposed to cut existing duties on Chinese goods by $ 360 billion by 50%..
In return, China has promised to buy American agricultural products. China made similar promises in past negotiations, but mostly did not make large purchases. Trump has focused on American agricultural products that China will acquire as part of the deal. China has pledged to buy about $ 40 billion in goods, and the US president wanted that figure to approach $ 50 billion..
«The sales team on both sides maintains close ties», – Chinese Ministry of Commerce spokesman Gao Feng said at a briefing on Thursday without providing any specific information..
Progress in negotiations with China comes days after Trump struck a deal with Congressional Democrats on his revised trade deal with Mexico and Canada..
The breakout with Beijing came weeks after intense negotiations between the world’s two economic superpowers resumed in October..
Trade uncertainties have hit hard on the economy, which is the centerpiece of the presidential re-election campaign. On Wednesday, Federal Reserve Chairman Jerome Powell avoided commenting directly on any specific trade agreement with China, Mexico and Canada, but acknowledged that such progress «remove uncertainty and become a positive factor» for the US economy.
The White House’s proposal to Beijing on trade tariffs, first published in The Wall Street Journal on Thursday, appeared last week and may have changed since then. Recent negotiations have been largely at the parliamentary level, as U.S. Trade Representative Robert Lighthizer tries to push a change of NAFTA administration through Congress..
Trump’s admission that the US wants a deal has been marked by a change in tone in recent weeks. Earlier, the American president repeatedly argued that Beijing needed an agreement more than Washington, and offered to be content with waiting for the conclusion of elections in November 2020, which disappointed investors.
The Trump administration appears to have been sharply divided over the idea of a tariff waiver. Some officials close to Trump, most notably the most hawkish White House trade advisor Peter Navarro, argue that import duties should remain as a mechanism to enforce any trade agreement..
As a conciliatory gesture, China’s Department of Commerce announced Friday that it will lift reciprocal duties on U.S. soybeans and pork..