The United States and China announced a phased trade deal agreement on Friday. The “Phase One” agreement promises to reduce some tariffs with the understanding that the Chinese would purchase more American farm goods and similar goods.
As part of the agreement, Beijing will import a minimum of $200 billion of additional U.S. services and goods within the next two years. According to the U.S. Bureau of Economic Analysis, this is in addition to the $130 billion of U.S. goods it bought in 2017 before the trade war began., as well as $56 billion in services it purchased at that time.
The deal means China will be importing more wheat, rice, and corn from the U.S. In recent years, China hasn’t been a significant player of these exports coming from the U.S. On the other hand, China previously made up 50 percent of Chinese agricultural purchases in 2017.
If the terms of the agreement are met, it would mean an enormous improvement in exports of U.S. products to China. Some farmers in the U.S., however, felt underwhelmed by the deal.
Burton Eller, executive director of the agriculture advocacy group National Grange, said: “Is China going to live up to their commitment? Are we going to get something in black and white that says they’re going to buy this much over this much time?”
Meanwhile, as of Sunday, the U.S. also agreed to reduce tariffs on $160 billion of Chinese-made laptops, cell phones, and other consumer goods that were set to go into effect on December 15. Meanwhile, existing tariffs on $120 billion of other items such as Bluetooth headphones and smart speakers would be reduced to 7.5 percent. $250 billion in Chinese goods will still face 25 percent in tariffs.
Part of the agreement also calls for the Chinese to suspend retaliatory tariffs, in particular, those directed at wheat, corn, and U.S. vehicles and auto parts. The tariffs were also set to take effect on Dec. 15.
The full 86-page agreement is set to be signed in Washington by the first week of January.
President Donald Trump had earlier promised in October that China would make $50 billion of agricultural promises as part of the deal. The trade deal followed Congressional efforts to pass a new North American trade agreement.
The deal will also offer additional protection for Chinese companies that operate in the U.S. as well as for foreign companies that operate in China.
Trump tweeted that “Phase Two” of the trade talks will begin immediately.