What is Phase One of US-China Trade Deal about?
Last Wednesday, officials from China and the US met in Washington to sign a trade agreement. Under this new deal, China is expected to “buy an additional $12.5 billion in US agricultural products in year one, and then $19.5 billion in year two”. Meanwhile, the US will “reduce tariffs on $120 billion in Chinese products from 15% to 7.5%”.
According to Chinese Vice-Premier Liu He, China’s President Xi Jinping has called the deal “good for China, the US and for the whole world”. Additionally, Mr Donald Trump stated that it was critical to ease trade tensions.
At the moment, the trade war between the two countries has affected the global economy with China believing that the US is trying to curb its rise as a global economic power. On the other hand, the US has pointed fingers at China for unfair trading practices and intellectual property theft.
After signing the deal, the US President has hinted that negotiations for a phase two deal will start at once. Although some experts are skeptical about the effectiveness of the agreement, others see it as the first step towards improving the bilateral trade relationship.
Following this trade agreement with China, Mr Trump is said to be prioritising the US-Canada-Mexico deal which will replace the North American Free Trade Agreement. The Senate has already approved the deal and Canada is expected to agree to it in the coming months.
US citizens are tipped to vote for the next US President in early November this year and based on a survey done by Goldman Sachs, an overwhelming percentage of its clients are expecting Trump to triumph. Improving the US economy could be seen as a key determinant of Trump’s future in the Oval Office.