US has withdrawn threatened Chinese tariff increases, but details of full deal not published
December 19, 2019: In a reported ‘Phase One’ agreement with China, the US has agreed to ditch its threatened new tariffs of $156 billion on Chinese goods, and has reduced but not removed existing tariffs. In return, China has agreed to buy more US agricultural exports and change its trade practices in the areas of intellectual property, technology transfer, agriculture, financial services and currency.
The United States Trade Representative's Office statement outlined these points, but the full text of the agreement has not been released. It is undergoing a legal review, before being signed and released.
Neither government has released specific figures on the agreed Chinese purchases of US farm goods or what structural changes China will make to its economic system.
The US will maintain a 25 per cent tariff on $US250 billion of Chinese goods, while a 15 per cent tariff on another $US120 billion in Chinese goods imposed in September will be reduced to 7.5 per cent.
Trump has used tariff wars against China and others to mobilise domestic electoral support, but this strategy may have reached its political and economic limits, as domestic business groups and consumers feel the impact of price rises and loss of access to overseas markets.
The New York Times has labelled the deal as “classic, cynical Trump: point out a problem, make it bigger, and then claim victory over getting back to the starting place, but with less money and credibility.”
In the global context, some cooling of the trade wars is welcome, as they undermine the multilateral trading system and have already had a negative impact on global economic growth. But it seems likely in an election year that the US will continue with the rhetoric of trade and strategic confrontation with China in what Vice-President Pence has called ‘a new Cold War.’ AFTINET rejects this strategy and supports a fair and peaceful multilateral trade system based on human rights and environmental sustainability.