It seems the trade war between China and the United States will rest a little following the deal to cut tariffs between the two countries. Yesterday, the two economic superpowers announced a “phase one” agreement that lowers the US tariffs of some American Farm products.
Based on the agreement, China has pledged to import goods and services worth not less than $200 billion from the United States within the next two years. These purchases from China would be a massive leap of the US export trade to China, according to US officials.
Before the US-Chinese trade war began two years ago, China imported about $130 billion and $56 billion worth of goods and services, respectively, from the US in 2017. Since the trade war began, US exports have suffered a hit because the Asian country is one of the biggest importers of American goods.
But it seems things will gradually come back to normal if both countries fulfill their part of the agreement, according to US officials.
The U.S. part of the deal
In return for Chinese imports of U.S. goods, US officials said the US is going to suspend all tariffs imposed on Chinese goods in the U.S. The 86-page agreement will be signed in January by all parties to the deal.
Donald Trump has, on Friday morning, tweeted that the US has come to terms with China in phase one agreement of the trade deal. He said that Chinese officials had struck a deal with the US on some structural changes and the heavy purchase of manufactured goods, energy, and agricultural products from the U.S.
Later on, Trump told reporters that China might make close to $50 billion purchases on Agricultural products within the deal period, which is in line with the promise he made earlier in October.
However, Chinese officials said in Beijing that the two countries had struck a trade deal. But there was no specific purchase amount the country promised the U.S. on agricultural imports. The officials stated that specifics like that were not discussed.
Agreement on the heels of recent judicial inquiries against Trump
The agreement is coming when the U.S. judiciary is planning to impeach Trump for his government’s obstruction and abuse of power. It is also happening at the time when the U.S. Congress is passing a bill for the establishment of the North American Trade Agreement.
According to Robert Lighthizer, the U.S trade representative, Beijing could commit about $16 billion in the importation of U.S. farm products next year or about $32 billion within the next two years. Also, Beijing reiterated that it might spend an additional $5 billion a year on top of the proposed spend.
Lighthizer said it’s a big step towards resolving the trade conflict between the two countries. He further pointed out that the agreement will be a big boost to the United States economy since China is one of the biggest importers of its products.