Tariffs on hold in early US-China trade deal

China's yuan jumped to a 4-1/2 month high against the U.S. dollar and Chinese shares rallied on Friday on hopes the two sides will avoid further escalation of the trade war.

The United States and China on Friday announced a "Phase One" deal that would prevent an immediate escalation of the trade war between the two largest global economies. President Trump has previously mentioned, however, that China would purchase up to $50 billion in agricultural goods.

Calling the phase one pact "an fantastic deal for all", Trump said phase two negotiations will begin "immediately" rather than wait until after the 2020 election. "A broad spread of sectors are going to benefit from a China deal if we're able to get that done", he said at the Farmers Business Network conference.

The United States and China cooled their trade war on Friday, announcing a "Phase one" agreement that reduces some USA tariffs in exchange for increased Chinese purchases of American farm products and other goods.

Chinese officials said at a briefing in Beijing Friday that if Washington reduces the tariffs, China will lower its trade penalties on American goods and also scrap plans for new tariffs Sunday.

Experts say Beijing is just as eager to resolve the trade deal.

The Washington Post reported that Trump had signed off on a swap of tariff reductions in return for China spending $50 billion on United States farm goods, tightening its intellectual property protections and opening its financial services markets.

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The report comes after Trump met with top trade advisers in the afternoon to discuss the pact, and just days before the United States is set to impose new tariffs on nearly $160 billion of Chinese imports on December 15. President Donald Trump tweeted earlier Thursday, without providing further detail.

With the expansion of China's domestic market, Chinese enterprises will import more high-quality and competitive goods and services from countries including the United States under the WTO rules as well as market rules and business principles.

America's trade battle against China could be in its closing act after US President Donald Trump struck a tentative deal with Beijing.

Beijing's silence, however, fuelled questions over whether the two sides can come to a truce in their bitter trade war before a new round of tit-for-tat tariffs takes effect on Sunday.

Even amid the positive signs on trade, Chinese Minister of Foreign Affairs Wang Yi (王毅) yesterday highlighted the other confrontations between the two sides. "Many of us are highly skeptical that the agreement will be enough to outweigh these other costs", Lovely said.

The USTR added that the deal requires structural reforms to China's economic and trade regime and covers contentious areas including intellectual property and Beijing's practice of forcing US firms to transfer technological know-how to Chinese partners.

  • Darren Santiago