The US and China agreed to the first phase of a broader trade agreement that will see the US reduce tariffs, and at least temporarily calm fears of an escalating trade war between the world’s two largest economies, reported Bloomberg.
US President Donald Trump said that he expects China’s agriculture buying to hit $50 billion annually ‘pretty soon.’
The US will also suspend new import taxes that were set to take effect on 15 December 2019 covering $160 billion of products such as smartphones and toys, said Robert Lighthizer, the US Trade Representative.
The world’s second-largest economy committed to increase imports of US goods and services by no less than $200 billion more than the 2017 level over the next two years, said Lighthizer. That would be more than double the $187 billion in goods and services the US exported to China in 2017.
In return, the US President agreed to reduce some existing US tariffs, halving 15 per cent duties on $120 billion of imports but maintaining a 25 per cent levy on some $250 billion of Chinese goods. Trump said he would also delay new import taxes which were set to take effect on 15 December 2019 on $160 billion of products such as smartphones and toys.
Lighthizer said he expected the 86-page agreement to be signed by him and his counterpart, Vice Premier Liu He, in early January 2020 in Washington and released publicly then. Lawyers for both sides will review the accord before signature, and the US Trade Representative expects it will come into effect 30 days after the signing.
On agriculture, the Chinese made detailed commitments that would see them purchase at least an additional $16 billion annually in commodities on top of the pre-trade-war level of $24 billion and endeavour to buy as much as $50 billion annually, added Lighthizer.
Chinese officials said the text agreed by the two sides comprises nine chapters, includes sections on intellectual property, forced technology transfer, food and agricultural products, finance, currency and transparency, boosting trade, bilateral assessment and dispute resolution.
US tariffs would be rolled back in stages, they said, though Lighthizer disputed that, saying that duties would only be reduced in the future if further phases of a larger agreement were concluded.