WASHINGTON — The United States and China have reached a preliminary trade agreement that includes the cancellation and rollback of some tariffs on Chinese products and a commitment by Beijing to step up purchases of American farm goods.
An agreement on the so-called phase one deal, confirmed by President Donald Trump and senior Chinese officials moments apart Friday, could defuse tensions in a nearly two-year-long trade war that has strained relations and hampered the global economy.
“This is the first bilateral trade deal in 20 years — it was hard fought, hard won and long overdue,” said Henry M. Paulson Jr., the former treasury secretary who is chairman of the Paulson Institute, a think tank focused on U.S.-China relations. “While the issues between the U.S. and China extend far beyond trade, this is a first step toward completing a comprehensive trade agreement.”
Neither side, however, provided specifics of the deal, and Chinese officials noted that the agreement still has to go through “legal review, translation and proofreading.”
Over the last year, previous tentative deals to resolve the standoff have fallen apart before completion, sending both sides back to the negotiating table. And even if the latest agreement is finalized, it is a far cry from the comprehensive deal Trump once promised to force China to dramatically reshape its practices.
Trump, in a tweet Friday, described the deal as “very large,” with “many structural changes and massive purchases” of U.S. agricultural, energy and manufactured products.
In exchange, Trump confirmed he was withdrawing the 15% tariffs on about $160 billion of Chinese imports that were set to take effect on Sunday. In addition, he said he was halving similar taxes on $110 billion of goods from China, but would keep 25% tariffs on another $250 billion of imports that Trump had imposed earlier.
When Trump first announced the phase one deal in early October, he said the Chinese had agreed to buy $40 billion to $50 billion of U.S. farm goods — about double the average annual amount in recent years prior to the trade war. And on Friday, he told reporters again: “The farmers are going to have to go out and buy much larger tractors.”
Chinese officials, however, were more circumspect in their characterization of the deal. Pressed at an 11 p.m. news conference in Beijing, they declined to provide specifics on the amount, type or timing of purchases of U.S. agricultural products by China, saying only that the increase would be by a “notable margin.”
Many analysts say China will be hard-pressed to make a specific commitment on purchases because of its trading relations with other countries and the potential for changing needs and preferences from Chinese buyers.
The Chinese also gave no specifics on the amount of tariff reductions. Wang Shouwen, vice minister of commerce and deputy international trade representative, reading from a script announcing the agreement, said that the U.S. would fulfill its commitments to remove tariffs on Chinese products “phase by phase.”
Chinese officials said the phase one deal contained nine chapters, including intellectual property rights, technology transfer, food and agriculture, financial services and exchange rates and transparency.
It was unclear, however, to what extent the agreement addressed Chinese policies pressuring foreign firms to hand over technology and trade secrets in order to have access to China’s markets. The deal also made no mention of China’s heavy subsidization of state-owned enterprises, another longstanding concern on the part of the U.S. and other countries.
After many months of a trade war marked by tit-for-tat tariffs and heated rhetoric, China experts welcomed news of a partial trade agreement, although they remained skeptical about its substance or how far it would go in helping bilateral relations that have grown increasingly tense on a broad range of issues, including trade, security and technology.
David Loevinger, a former senior Treasury official on China affairs, said after watching the Chinese news conference late Friday that the announcement was “pretty much in line with prior expectations for a mini-skinny deal.”
He noted there was no “heavy policy lifting” from either side: no firm commitment from the Chinese on farm purchases; nothing on easing of U.S. restrictions on technology, trade or investment; and no assurances there will be more tariff rollbacks.
“This along with continued tensions on technology and foreign policy issues will continue to weigh on business investment,” said Loevinger, an analyst for TCW Emerging Markets Group in Los Angeles.
“Given how long it took to agree on a mini-skinny deal,” he added, “the chance of further phases being agreed before the election are between slim and none.”
Su reported from the Times Beijing bureau.
