US President Donald Trump has signed off on a phase-one trade deal with China, averting the introduction tomorrow of a new wave of US tariffs on about US$160 billion of consumer goods from the Asian nation, people familiar with the matter said.
The deal presented to Trump by trade advisers on Thursday included a promise by the Chinese to buy more US agricultural goods, the people said.
Officials also discussed possible reductions of existing duties on Chinese products, they said.
Photo: AFP
An announcement was expected yesterday in Washington, people familiar with the plans said.
Trump on Thursday tweeted that the US and China are “VERY close” to signing a “BIG” trade deal.
“They want it, and so do we!” he tweeted five minutes after equity markets opened in New York, sending stocks to new records.
However, Trump had changed his mind on deals with China before.
Negotiators have been working on the terms of the phase-one deal for months after Trump announced in October that the two nations had reached an agreement that could be put on paper within weeks.
The US has added a 25 percent duty on about US$250 billion of Chinese products and a 15 percent levy on another US$110 billion of its imports over the course of a roughly 20-month trade war.
Discussions now are focused on reducing those rates by as much as half, as part of the interim agreement Trump announced almost nine weeks ago.
In addition to a significant increase in Chinese agricultural purchases in exchange for tariff relief, officials have also said a phase-one pact would include Chinese commitments to do more to stop intellectual-property theft and an agreement by both sides not to manipulate their currencies.
Put off for later discussions are knotty issues such as longstanding US complaints over the vast web of subsidies ranging from cheap electricity to low-cost loans that China has used to build its industrial might.
The new duties, which were scheduled to take effect at 12:01am tomorrow Washington time unless the administration says otherwise, would hit consumer goods from China, including smartphones and toys.
Even amid the positive signs on trade, Chinese Minister of Foreign Affairs Wang Yi (王毅) yesterday highlighted the other confrontations between the two sides.
Wang said that US actions had “severely damaged the hard-earned basis for mutual trust” and left the relationship in their “most complex” state since the two sides established ties four decades ago.
Before today, Trump’s advisers had sent conflicting signals and stressed that he hadn’t made up his mind on the next steps.
The decisions facing Trump over a trade deal highlight one dilemma he confronts going into next year’s presidential election: Whether to bet on an escalation of hostilities with China and the tariffs he is so fond of, or to follow the advice of more market-oriented advisers and business leaders who argue a pause in the escalation would help a slowing US economy bounce back in an election year.
“The outcome of US-China trade talks will be a key determinant of the trajectory for 2020 growth. At one extreme, a deal that takes tariffs back to May 2019 levels, and provides certainty that the truce will hold, could deliver a 0.6 percent boost to global GDP. At the other, a breakdown in talks would mean the trade drag extends into the year ahead,” Bloomberg chief economist Tom Orlik said.
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