The trade conflict between two super economic powers – US and China – has reportedly come to an end. Both nations have reached “a deal in principle” to resolve the months-long trade war. President Donald Trump signed off the phase one deal with China and suspended the new tariffs which were scheduled to go into effect from December 15 this year. The 15 December tariffs would apply to almost $160 billion of Chinese imports such as video game consoles and computer monitors.
The deal also included a promise from Chinese administration to buy more US agricultural goods. The White House official sources confirmed that the possibilities of deducting existing duties on Chinese products were also discussed. The terms have been agreed but the legal text has not yet been finalized.
US negotiators reportedly have offered to cut the existing tariffs on Chinese goods by as much as 50% to secure the phase one trade deal.
However, the report of reaching out on the limited deal agreement by the US and China both come on Thursday evening, Beijing chose to be silent on the issue.
President Trump had changed his mind on deals with China before. He announced in October that the two nations had reached an agreement that could be put on paper within weeks.
The White House administration has added a 25 per cent duty on about $250 billion of Chinese products and a 15 per cent levy on another $110 billion of its imports over 17 months-long US-China trade war. Following the phase-one deal, these rates are expected to be reduced by as much as half.
Apart from increasing Chinese agricultural purchases on account of tariff relief, the phase-one pact would include Chinese commitments to do a check on intellectual-property theft and preventing the manipulation of currencies.
Tom Orlik, Bloomberg’s chief economist, says, ‘The outcome of US-China trade talks will be a key determinant of the trajectory for 2020 growth. At one extreme, a deal that takes tariffs back to May 2019 levels, and provides certainty that the truce will hold, could deliver a 0.6% boost to global GDP. At the other, a breakdown in talks would mean the trade drag extends into the year ahead.”