The United States and China have sealed the agreement on what has been dubbed as the ‘first phase’ of the long-debated trade deal, putting a brake on the ongoing trade tensions between the two superpowers.
Speaking on December 13, Donald Trump said that the agreement will stave off further tariffs, keeping them at 25 percent for USD 250 billion worth of US imports from China.
The move comes on the back of the tentative agreement on a partial trade deal revealed in October. However, the measure had to be finalized in order to suspend the new round of tariffs on consumer goods, which was scheduled to take effect on December 15.
As such, the fresh tariffs on USD 156 billion in annual imports of Chinese goods such as smartphones, toys, and electronics have been canceled.
Furthermore, the deal is expected to be extremely beneficial for the farmers, as Trump pointed out, with China anticipated to spend up to USD 50 billion on US agriculture.
“The farmers are going to have to go out and buy much larger tractors, because it means a lot of business — a tremendous amount of business,” he said.
More Talks Ahead
There are a lot of tougher issues to be tackled in the next stage of negotiations, including the opening up of the Chinese markets to U.S. firms, as well as a stronger commitment on the Chinese side to the protection of intellectual property rights, and technology transfers.
“And we’ll use them (tariffs) for future negotiations on the phase two deal, because China would like to see the tariffs off, and we — we’re okay with that,” he added, stressing that China would like to start with the stage two negotiations immediately.
On the other hand, Trump would have liked to resume trade talks with China after the presidential elections in 2020, nevertheless, it appears that they would be launched much sooner than that.
The deal was welcomed by the U.S. National Retail Federation, as a move in the right direction.
“Tariffs create uncertainty and costs for American retail supply chains, and the trade war won’t be over until they are eliminated completely. We agree that we need to realign our relationship with China, but tariffs that harm American businesses, workers and consumers are not the answer and cannot be allowed to continue,” NRF Senior Vice President for Government Relations David French said.
The expected signing comes after NRF and other members of the Americans for Free Trade coalition sent President Trump a letter last week asking that December tariffs be suspended.
The coalition said that since the trade war began, Americans have paid an additional USD 42 billion in tariffs, according to Tariffs Hurt the Heartland. In addition, American businesses and farmers have faced USD 12 billion in retaliatory tariffs.
The anticipated December tariffs, saw a major spike in volumes at the US major container ports in November as retailers rushed to import merchandise at a lower price ahead of the holiday season.
In November, the cargo throughput at U.S. ports jumped to an estimated 1.95 million TEUs, up 8 percent year-over-year. That was the highest number since 1.97 million TEUs in August, when retailers did the same ahead of tariffs that took effect in September, NRF said.
The trade deal is being announced as Trump faces a vote on the two articles of impeachment, abuse of power and obstruction of Congress, at the House of Representatives on Wednesday this week.
This is the third time in American history that the House will vote on articles of impeachment against an American President.
Commenting on the process, Trump reiterated on Friday, he did nothing wrong, stressing the impeachment procedure was a “hoax” and a “witch hunt”.