U.S. and China Reach Initial Trade Deal

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WASHINGTON — The United States and China said they had agreed to an initial trade deal that would reduce tariffs on some Chinese goods and increase purchases of American farm products, a significant de-escalation in the 19-month battle that has rattled the world economy.

“We have agreed to a very large Phase One Deal with China,” President Trump said in a tweet on Friday, shortly after Beijing announced the two sides had brokered a deal.

Mr. Trump said that a 25 percent tariff that the United States has placed on $250 billion of Chinese products will remain in effect, but that a 15 percent tariff he put on $120 billion of products in September will be cut in half, to 7.5 percent. A round of tariffs scheduled for Sunday would be canceled, he said, and talks for a second phase of the trade deal would begin immediately.

“It’s a phenomenal deal,” he said during an event at the White House. “The tariffs will largely remain: 25 percent on $250 billion, and we’ll use them for future negotiations on the Phase 2 deal.”

The limited agreement was widely viewed as a détente that would prevent an escalation of tariffs ahead of the 2020 election and could help reignite trade between the world’s largest economies. But the preliminary pact lacked the magnitude of change that Mr. Trump had promised to deliver before talks broke down earlier this year and many details that have hampered past agreements continued to be in flux, including the size of China’s agricultural purchases.

As described, the agreement does not address American concerns about China’s industrial subsidies and state-owned enterprises: There were no details on the currency provisions in the pact, how China will go about ensuring protections of American intellectual property, or the extent to which China plans to roll back its tariffs. And text of the agreement still needs to be translated, scrubbed and signed.

The announcement handed Mr. Trump, a longtime critic of existing trade deals, his second trade win of the week. On Tuesday, Democrats announced plans to endorse the president’s revised North American trade pact, giving Mr. Trump a set of strong talking points that he can use on the 2020 campaign trail to tout his success in remaking two critical trade relationships.

While the Trump administration rolled out the agreement on Twitter, China took a more formal approach.

Wang Shouwen, China’s vice commerce minister, said at a Friday evening news conference in Beijing that the two sides had made “significant progress” and that the agreement would result in the United States removing some of the tariffs it has placed on $360 billion worth of Chinese goods. Those tariffs would come off “phase by phase” and the United States would agree to exempt more Chinese products from being taxed, he said.

“This will create better conditions for China and the United States to strengthen cooperation,” Mr. Wang said.

China confirmed that the agreement includes a commitment to buy more American agriculture products and to strengthen laws protecting foreign companies operating in China, as well as beefing up intellectual property rules and providing more transparency around currency movements. Mr. Wang said both sides have agreed to complete legal reviews as quickly as possible and that an official signing was still being worked out.

The trade war between the United States and China has taken a major toll on America’s farmers and Mr. Trump has consistently promised that Beijing will commit to buying $50 billion worth of farm goods as part of a trade pact.

“I think they’ll hit $50 billion,” Mr. Trump said on Friday. “They’ve already stepped it up.”

But both countries were coy about the quantity of American farm products that China would buy, with the office of the United States trade representative only describing China’s commitment as “substantial.” The Chinese government did not give a precise figure at a Beijing news conference, saying only that purchases would increase by a “considerable margin” to meet China’s needs for goods like soybean and pork.

Investors greeted Friday’s announcement somewhat skeptically. The S&P 500 slipped 0.1 percent. Yields on government bonds fell, suggesting slightly more pessimism for the outlook for growth and inflation. However, prices of key agricultural commodities such as soybeans and hogs — which China said it agreed to buy more of rose. Soybean futures rose 0.5 percent. Hog futures rose more than 1 percent, shortly before 12 p.m.

In the United States, analysts who have been tracking the negotiations for months were cautiously optimistic about the deal, but noted that much remains to be resolved between the two countries.

“It appears that this deal will involve at least a modest de-escalation of trade and economic hostilities, which gives financial market investors something to cheer about,” said Eswar Prasad, former head of the International Monetary Fund’s China division. “However, it does not resolve the fundamental points of tension between the two countries, which are likely to continue to fester and remain a damper on business sentiment and investment.”

The limited scope of the agreement could also open Mr. Trump up to political criticism from Democrats, who have argued that his negotiating style has failed to yield the results that he promised.

“He has sold out for a temporary and unreliable promise from China to purchase some soybeans,” Senator Chuck Schumer of New York, the Democratic minority leader, said of the president. “We’ve heard this song and dance from China before.”

-Matt Phillips contributed reporting from New York.

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