Thu, Jan 16, 2020 - Page 1 News List

Massive US-China purchases deal set to ease dispute

Reuters, WASHINGTON

The US-China trade dispute was set to enter a new, quieter phase yesterday as US President Donald Trump and Chinese Vice Premier Liu He (劉鶴) were to sign an initial trade deal that aims to vastly increase Chinese purchases of US manufactured products, agricultural goods, energy and services.

The “phase one” agreement caps 18 months of tariff conflict between the world’s two largest economies that has hit hundreds of billions of dollars in goods, roiling financial markets, uprooting supply chains and slowing global growth.

Trump and Liu were scheduled to sign the 86-page document at a White House event before more than 200 invited guests from business, government and diplomatic circles.

A translation of the text to Chinese was still being completed late on Tuesday afternoon, as Liu met with US Trade Representative Robert Lighthizer.

At a rally in Toledo, Ohio, last week, Trump had already begun touting the trade deal as a centerpiece of his 2020 re-election campaign, calling it “a big beautiful monster.”

The centerpiece of the deal is a pledge by China to purchase an additional US$200 billion of US goods over two years to cut a bilateral US trade deficit that peaked at US$420 billion in 2018.

A source briefed on the agreement said that China would purchase an additional US$80 billion of US manufactured goods over the two year period, including aircraft, vehicles and auto parts, agricultural machinery and medical devices.

Beijing would boost energy purchases by about US$50 billion and services by US$35 billion, while agricultural purchases would be given a US$32 billion lift over the two years, all compared with a 2017 baseline of US exports to China, the source said.

The phase one deal, reached last month, canceled planned US tariffs on Chinese-made phones, toys and laptop computers and halved the tariff rate to 7.5 percent on about US$120 billion of other Chinese goods, but it will leave in place 25 percent tariffs on a vast US$250 billion array of Chinese industrial goods and components used by US manufacturers.

Lighthizer and US Secretary of the Treasury Steven Mnuchin moved to stamp out suggestions that the US and China might review possible removal of more tariffs after the US election in November, issuing a joint statement that there were no written or oral agreements for future tariff reductions.

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