Tariffs on hold in early US-China trade deal

Andrew Cummings
December 13, 2019

On Thursday, President Trump tweeted that the United States and China were on the verge of signing an agreement on trade, curtly writing "They want it, and so do we!" with no follow-up.

While Beijing has formally confirmed that it will ramp up purchases of USA farm goods such as soybeans, corn and pork, the Asian nation still refuses to provide details on the size of purchases.

Friday's announcement by China's commerce ministry sent United States stock markets soaring, with the S&P 500, Dow Jones and Nasdaq up between 0.28 and 0.48 percent in morning trading on hearing the news.

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.

Over the last 20 months, the US has imposed tariffs on $550 billion worth of Chinese imports, while China has reciprocated by implementing tariffs on $185 billion worth of imports from the U.S. "The trade agreement comes on the heels of House Democratic agreement to support Trump's USMCA, which will update NAFTA for the 21st century".

The "Phase 1" deal announced Friday leaves unresolved some of the thorniest issues.

The administration alleges - and independent analysts generally agree - that China steals technology, forces foreign companies to hand over trade secrets, unfairly subsidizes its own firms and throws up bureaucratic hurdles for foreign rivals.

The intense talks, involving multiple trips by teams from both sides to and from Washington and Beijing, were further complicated by tensions over the pro-democracy uprising in Hong Kong.

"After such an interminable wait and having being led to water before, I would like to see something official in writing officially".

The December tariff increase was feared to have been a potential drag on US consumption, especially around the holiday shopping season, as many consumer goods including laptop computers, cellphones, toys and video game consoles would be affected.

The world's two largest economies have agreed to a preliminary "phase one" trade agreement text on Friday that would significantly draw down mutual economic recriminations they have imposed on one another. China responded with tariffs against U.S. goods, and the conflict has since escalated into a series of back and forth tariff hikes.

Repeated rounds of negotiations had failed to achieve a substantive deal. The House of Representatives will likely hold a vote next week.

A far-reaching agreement on China's technology policies will likely prove hard.

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