Almost two years after the start of the US and US trade war China the two countries want to seal a first trade agreement on Wednesday. Although this is only a partial agreement, it probably corresponds to a ceasefire in the trade conflict between the two largest economies: Both sides make concessions and do not want to impose any new punitive duties until further notice. However, the additional import fees imposed since 2018 will initially remain essentially the same.
The partial agreement will be signed at the White House in Washington. Among other things, US President Donald Trump and China's chief negotiator and Vice Premier Liu He should attend the ceremony. Trump's government sees the contract as the first of several phases of a comprehensive trade agreement. The trade war had recently weighed on the global economy and slowed economic growth in the two countries.
Details of the agreement remain unknown
The text of the trade agreement has not yet been published. According to American information, China is committed to importing from China United States to increase significantly. The treaty is also designed to solve intellectual property protection and technology transfer issues imposed by China. US financial service providers should also have better access to the Chinese market.
In return, the United States waived the threat of new punitive tariffs on consumer goods such as laptops and smartphones worth $ 150 billion in December. Washington also dismissed the allegation on Monday that China was manipulating its currency to take advantage of international competition. Other controversial issues are to be resolved in a second phase of the trade agreement.
With the agreement, China is committed to increasing its imports from the U.S. by $ 200 billion within two years. As a basis, the year 2017 was agreed when China imported US goods worth around $ 130 billion. An average increase of $ 100 billion a year would be a significant increase. Imports will continue to increase after 2021, "in order to significantly balance the trade relationship," the US government said. Trump originally started the trade conflict because China exports much more to the US than vice versa.
Agricultural products are said to account for at least $ 40 billion of additional imports. That would benefit US farmers – an important group for Trump with a view to the November election. At first, however, it remained unclear what funds the US government would have if China failed to meet its import commitments.
Punitive tariffs burden both countries
The punitive tariffs of 25 percent imposed by the Trump administration on goods worth around $ 250 billion since 2018 should initially remain. On the other hand, further tariffs of 15 percent on Chinese goods worth $ 120 billion are to be halved. Trump sees the punitive tariffs as trump cards for the negotiations for an agreement for the second phase. He wanted to go back later Peking travel to start the next negotiations there, Trump said on New Years Eve when he announced the date of signing the first deal.
Trump had said until September that he either wanted a "big deal with China" or no deal at all. China is suffering from punitive tariffs and urgently wants an agreement, was Trump's mantra. However, Beijing did not bow to US pressure, and at the same time warning signals increased that the US economy was also increasingly suffering from punitive tariffs. Trump then began promoting a multi-step deal.