US-China agree on ‘phase one’ of trade deal; US suspends new tariffs to take effect from Sunday

Washington/Beijing: The United States and China have decided on the first stage of the trade deal, suspending the tariffs both the countries had imposed. US President Donald Trump made the announcement via a tweet from his account on Friday. After that, China also confirmed the news during a press conference and said that the agreement to the effect would be signed in January. Additionally, analysts claimed that the deal was the beginning of the end to the trade war between the United States and China.

The US-China trade war has been stretching for the last one and a half year. The trade war has severely affected the Chinese economy and begun to show its effects even over the global economy. China was, therefore, making tremendous efforts to end the trade war. Despite the process for a trade agreement receiving jolts twice in the past, China was seen taking the initiative to work out a deal. Last month, President Trump’s statement that an agreement might be reached only after 2020, had indicated towards the trade war dragging further.

However, on Wednesday, President Trump claimed that a breakthrough regarding the trade agreement with China was in sight. The statement sparked fresh hope for a deal between the two nations. On Friday, President Trump tweeted on the agreement over phase one of the trade deal. Under the agreement, China would begin importing additional US goods worth $200 billion, from the agriculture, manufacturing and energy sectors in the next two years. China has agreed upon making a significant chunk of the imports for the agricultural products, and these would then be increased by $32 billion over the next two years.

The rules for US companies for technology transfer to China have been relaxed. At the same time, US officials stated that China had halted the devaluation of its currency. China informed that the tariffs levied on the US goods would also be reduced or withdrawn. In return, the United States would cancel the possible tariffs scheduled for Chinese imports worth $160 billion. Nevertheless, the US tariffs of 25% on Chinese goods worth $250 billion were retained.

The United States has warned China that the deal was only in its preliminary stages and thus if China violated it, the tariffs would be reinstated. Furthermore, both countries hinted at the beginning of the negotiations for the second phase of the deal immediately after the preliminary agreement.

A positive response emerged from around the world on phase one trade deal that indicated an end to the trade war between the two largest economies of the world. Moreover, the stock markets in the United States, Europe and Asia showed a record jump after the development.

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