The deal between China and the U.S. has finally been agreed upon. Kind of.
Phase One of the trade deal has been signed, with the U.S. agreeing to lower tariffs against Chinese goods and China purchasing more U.S. farm, energy, and manufactured goods. The Phase One agreement was announced by the Office of the U.S. Trade Representative (USTR) Dec. 13, shortly before additional tariffs against China were set to take effect on Dec. 15.
“President Trump has focused on concluding a Phase One agreement that achieves meaningful, fully-enforceable structural changes and begins rebalancing the U.S.-China trade relationship,” said United States Trade Representative Robert Lighthizer.
“This unprecedented agreement accomplishes those very significant goals and would not have been possible without the president’s strong leadership.”
An additional 15 percent on $160 billion worth of Chinese exports was set to be imposed Dec. 15. Although the additional tariffs were not enacted, the U.S. will be maintaining 15 percent tariffs on approximately $250 billion of Chinese imports, along with 7.5 percent tariffs on approximately $120 billion of Chinese imports, according to USTR.
Chinese officials have yet to confirm Washington’s announcement, especially in terms of purchase commitments.
U.S. officials say China has agreed to increase purchases of U.S. products and services by at least $200 billion over the next two years, Reuters reported Dec. 19. Representatives said this would include additional purchases of U.S. farm products of $32 billion over the time period. This would average the annual total to about $40 billion, compared to a baseline of $24 billion in 2017 before the start of the trade war.
Chinese officials have yet to confirm Washington’s announcement, especially in terms of purchase commitments. The country did say it will import more U.S. wheat, rice, corn, energy, pharmaceuticals, and financial services.
Neither countries have released text of the proposed agreement.
Arriving at a deal
China declared the day before Phase One was announced that they would be removing tariffs from a list of U.S. imports, mostly chemical products. A week prior, China exempted some U.S. soybeans and pork from tariffs.
“The goal [of this move] is to expand purchases and reassure the United States,” a Chinese source had told CNBC.
U.S. officials say China has agreed to increase purchases of U.S. products and services by at least $200 billion over the next two years.
President Donald Trump tweeted the night before the agreement was announced that the U.S. was getting “VERY close to a BIG DEAL with China. They want it, and so do we!”
Upon announcement of the deal, Trump tweeted negotiations on Phase Two of the deal would begin immediately, rather than waiting until the conclusion of the 2020 election.
Trump announced back in October a preliminary Phase One trade deal had been reached with China that called for billions of dollars of goods be purchased from U.S. farmers, but the deal was a framework with most of the details still to be worked out. — WLJ
