US and China sign long-awaited ‘phase one’ trade deal
US President Donald Trump and Chinese vice premier Liu He have signed a “phase one” trade deal in Washington that puts in place a fragile peace in the long-running tariff war between the world’s two biggest economies.
Trump and Liu put pen to paper in a packed East Room at the White House after months of negotiations. The US President, flanked by members of his cabinet, heralded the deal as “a momentous step” towards “a future of fair and reciprocal trade”.
Under the terms of the deal, China will purchase at least $200bn (£154bn) more of US goods over the next two years. The text of the agreement says it will buy $78bn more in manufacturing products over the 2017 level and $32bn more in farm goods.
In return, the US has already suspended tariffs on $160bn of Chinese mobile phones and laptops, and will halve existing tariffs on $120bn of other goods to 7.5 per cent.
Yet US tariffs of 25 per cent on $250bn of Chinese goods will stay in place until a “phase two” deal.
The fact these tariffs will remain demonstrates the uneasiness of the truce struck between the two powers.
Although China has made concessions on intellectual property and state support for its industries, they are below what the US would have wanted.
The deal includes commitments by China to ensure foreign companies are not put under pressure to transfer technology in return for market access. China also pledged to not devalue its currency for competitive gain.
Anahita Thoms, head of the trade practice at the law firm Baker McKenzie in Germany, said the deal between the US and China “will not resolve many of their disagreements”.
Neither country will be “entirely happy with the deal”, she said. “For example, the US wanted to have comprehensive structural reform, and ‘phase one’ is certainly not that. Similarly, China would have preferred to have no tariffs at all.”
The signing took place a week before Trump will become only the third US president in history to face an impeachment trial in the senate.
During a rambling introduction to the signing in front of dignitaries such as Henry Kissinger and business chiefs, Trump gestured to the Capitol building and said: “They have a hoax going on over there.”
US President Donald Trump and Chinese vice premier Liu He have signed a “phase one” trade deal in Washington that puts in place a fragile peace in the long-running tariff war between the world’s two biggest economies.