US, China sign 'momentous' trade deal

Darnell Taylor
January 15, 2020

Chinese firms will buy American products based on market conditions, both countries should create favourable conditions for Chinese purchases of U.S. products, China's Vice Premier Liu He said during the signing ceremony of the phase-one trade deal at the White House on Wednesday. That's a windfall for Trump supporters in rural America but an ambitious goal considering that China has never bought more than $26 billion in USA agricultural products in a year.

They edged up a bit previous year, but remained far below the 2017 level.

So far this year, the US deficit with China in the trade of goods has declined by 16%, or $62 billion, to $321 billion compared with a year earlier. That includes $75 billion more in US manufactured goods, $50 billion more worth of USA energy and about $40 billion in services, Reuters reported.

White House trade adviser Peter Navarro said the administration has authority under the agreement to rule within 90 days on a complaint that China violated "phase one" and could reimpose tariffs in response "and the Chinese have promised not to retaliate", reported Politico.

After announcing the deal December 13, the US canceled a damaging round of new tariffs that were due to kick in two days later and promised to slash in half the 15 percent tariffs on $120 billion imposed September 1 on consumer goods like clothing.

"Based on what we know of this so called "Phase One" deal, China hasn't agreed to substantively do anything new, and now it seems that the Trump tariffs will remain in place even after the deal is signed", Democratic Senator Chris Murphy said.

"Given the numerous deals that have been reached and then breached in the past two years, we are also skeptical", the National Farmers Union, which advocates on behalf of nearly 200,000 American farm families, said in a statement. The signing occurs a week before the U.S. Senate is due to begin its impeachment trial of the U.S. president.

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USA markets surged before and after Wednesday's agreement.

More than half of USA exports to China would also still be subject to retaliatory tariffs, the institute said."Steep tariffs are the new normal", wrote Chad Brown, a senior fellow at the institute and former economist at the World Bank.

If China fails to abide by the agreement, 'the president has the ability to put on additional tariffs, ' Mnuchin said on CNBC Wednesday as part of a media blitz promoting the new pact. The Trump administration paid out $28 billion in aid to farmers in the last two years.

"I'll be going over to China in the not-too-distant future to reciprocate", he said. But the US economy has remained strong, with historically low unemployment, relatively low inflation and record-setting stock market performances. "Left to its own devices, China has repeatedly demonstrated that it is unwilling to hold up its end of the bargain". Still, tariffs on hundreds of billions of dollars in imports remain in place, leaving many Americans to foot the bill. It would maintain a 25% tariff on $250 billion of Chinese products.

The U.S. will review Beijing's compliance with the deal no sooner than 10 months after the signing to determine whether it's worth easing those levies, according to Bloomberg, which cited people familiar with the parameters.

"Together, we are righting the wrongs of the past and delivering a future of economic Justice and security for American workers farmers and families", the president added. "This is history", Mr. Kudlow said.

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