China, US Announce Trade Deal

Source: By Katie Dehlinger, Farm Business Editor, Progressive Farmer • Posted: Sunday, December 15, 2019

Phase One of US-China Agreement Includes Large Purchases of Farm Goods, Lower Tariffs

MOUNT JULIET, Tenn. (DTN) — China and the U.S. reached a preliminary agreement on the first phase of a trade deal that includes increased purchases of U.S. agricultural products, although the amount wasn’t specified.

The deal, which still needs to go through a legal review before it’s signed into place, prevents a new tranche of tariffs from going into effect on Sunday. The 25% tariffs on approximately $250 billion of Chinese imports will remain, while a 15% tariff on $120 billion of imports will be cut in half, to 7.5%.

Chinese officials said the U.S. would remove tariffs in stages, but offered no further details.

President Donald Trump and other trade officials said the deal requires structural reforms and other changes to China’s economic and trade regime in the areas of intellectual property, technology transfer, agriculture, financial services, and currency and foreign exchange.

“We will begin negotiations on the Phase Two Deal immediately, rather than waiting until after the 2020 Election,” President Donald Trump tweeted Friday morning. “This is an amazing deal for all.”

While the president and others have previously said China could commit to buying $40 billion to $50 billion of U.S. ag products, the Chinese have balked at committing to a dollar figure, instead saying the purchases needs to be based on domestic demand, which is under duress at the moment due to the outbreak of African swine fever.

According to the South China Morning Post, which is often viewed as a source of official news from Beijing, China purchased $137 billion worth of agricultural goods from all origins in 2018. The U.S. has never surpassed $30 billion of that total, coming closest in 2012. Last year, U.S. sales totaled only $9.2 billion as tariffs weighed on trade.