The administration of US President Donald Trump has dropped its plan to impose tariffs on US$160 billion of Chinese imports, which was to begin today, under an interim agreement that de-escalates a 17-month trade dispute between the world’s two biggest economies.
As part of the agreement announced on Friday, Washington is also reducing its existing import taxes on about US$112 billion in Chinese goods from 15 percent to 7.5 percent.
In return, China has agreed to buy US$32 billion in US farm products over two years, US Trade Representative Robert Lighthizer told reporters.
Photo: AFP
Beijing has also committed to ending a long-standing practice of pressuring companies to hand over their technology as a condition of gaining access to the Chinese market, Lighthizer said.
China had also agreed to lift nontariff barriers to the Chinese market for products such as beef, poultry, seafood, pet food and animal feed, he said.
In all, the US expects a US$200 billion boost in exports over two years, he said.
“We expect the trade deficit to go down for sure,” Lighthizer said, adding that the deal would likely be signed in the first week of January and take effect 30 days after that.
“Everything is written,” he said.
The administration said that the text of the deal was still being translated between Chinese and English.
The so-called phase 1 agreement leaves some major issues unresolved, notably US complaints that China unfairly subsidizes its own companies to give them an edge in world markets.
However, it does defuse a conflict that has unnerved financial markets and hobbled global economic growth.
“This deal should go a long way in reversing the downward spiral in bilateral trade relations and increasing certainty for US businesses,” said Wendy Cutler, a former US trade negotiator who is now vice president of the Asia Society Policy Institute.
Trump, who first announced the deal on Twitter, said that work on a follow-up phase 2 agreement would begin immediately.
In Beijing, Chinese experts and media joined government officials in saying that the deal would reduce uncertainty for companies.
They remained cautious, saying that both sides would have to show a willingness to compromise to resolve the more fundamental differences between them.
“It at least stabilizes the situation and lays a foundation for the next round of trade talks or canceling additional tariffs in the future,” said Tu Xinquan (屠新泉), a professor at the University of International Business and Economics in Beijing. “I cannot predict what achievement can be made during the future talks.”
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