MercoPress. South Atlantic News Agency

US and China closer to striking final trade deal: end of uncertainty for investors foreseeable

Trump wants China to buy more agricultural products from the US plus a broader trade agreement

The United States have reached a phase one trade deal with China, unofficial White House sources leaked to the press Thursday, pending approval from President Donald Trump.

After discussing the issue of duties of 15%, set to take effect Sunday, which would affect about U$ 160 billion in Chinese-made goods including toys, computers, phones and clothing, the possibility of delaying the measure became likely as the White House has offered to scrap those duties and slash some existing tariffs in half, provided the Asian giant buys about U$ 50 billion worth of agricultural products, as requested by Trump instead of the offered U$ 40 billion. In exchange for that the US proposed cutting existing duties on $360 billion in Chinese products by 50%.

In addition to that, Trump also wants a broad trade agreement with China to address concerns about intellectual property theft, forced technology transfers and trade deficits. The president, who promised to crack down with China during his 2016 campaign, sees an agreement as an economic and political priority ahead of his 2020 reelection bid.
The world’s two largest economies have moved to rein in a trade war that threatens to drag on global growth. It is unclear exactly how the agreement between Washington and Beijing differs from a partial deal the president announced in October.

Major US stock indexes jumped following news of the deal in principle. Investors hope the US and China can reach an accord before the tariff deadline and avoid a potentially damaging escalation in their nearly 2-year-old trade war.
On Thursday morning, Trump tweeted that the US has moved close to a trade deal with Beijing after several false starts and near misses. “Getting VERY close to a BIG DEAL with China. They want it, and so do we!” he wrote.

Aside from his advisors, the president also met with major business figures on Thursday. As it is, the White House tariff offer to Beijing, first reported in The Wall Street Journal on Thursday, came last week and may have changed as talks progress at deputy level at this stage. But Trump looks more open now to a deal after a history contending that Beijing needs it more than Washington does.

Trump in October announced a partial phase one agreement with China as the world’s two largest economies try to de-escalate the economic conflict. Washington and Beijing had so far failed to sign the agreement. During months of trade talks with China, the president has previously touted progress before discussions crumbled. He has repeatedly said the negotiations are going well, even as trade officials struggled to reach a deal.