US President Donald Trump and Chinese Deputy Prime Minister Liu He signed a partial trade agreement in the White House on Wednesday. With the partial agreement, months of trade tensions are coming to an end, with the parties alternately slapping each other with import tariffs.
To get rid of the cold between the two parties for the time being, the countries are renouncing new import duties. The deal, which only has 86 pages, also stipulated that the United States should halve the import duties on Chinese goods imported in September last year. The import tax of 25 percent on Chinese goods with a total value of 250 billion dollars (224.6 billion euros) remains in force.
In addition, China has pledged, among other things, to purchase more American products, including agricultural products, aircraft and car parts. The Chinese promise to buy more than 200 billion dollars more in American products in the next two years than in 2017. China has also promised to stop devaluing its own currency and to better protect the intellectual property of American companies.
To comply with these agreements, trade envoys from both parties will meet a number of times a year to evaluate how things are going.
Trump: Together we repair mistakes from the past
“Together we are repairing mistakes from our past to ensure economic justice and security for American workers, farmers and families in the future,” Trump said before signing the partial agreement. The American president also claimed before signing that “such a large deal had never been concluded”.
He made these statements in the presence of Chinese Deputy Prime Minister Liu He and a room full of American officials and people from the American business community. The great absentee at the ceremony was Chinese President Xi Jinping. He previously wrote in a letter that he hopes the US will treat Chinese companies more fairly with this agreement.
Trade war is not over yet
With the partial agreement, however, the trade war is far from over. After signing the deal, there is an average US tax of around 19 percent on products from China. Conversely, the average import tax on a product from the US is more than 20 percent, according to figures from the Peterson Institute for International Economics (PIIE).
The import duties that still exist show that the signing ceremony on Wednesday is only an intermediate step. A phase two deal, as the Americans call the next step in this process, really has to make a difference. US Finance Minister Steven Mnuchin told business channel on Wednesday CNBC that import duties will only be further reduced in a follow-up agreement.
Trump did not think trade relations with China were fair
The trade feud between the two countries began with Trump taking office at the start of 2017. In his election campaign, he promised, among other things, to make the trade relationship between the US and China “fairer”.
Trump did not find the trade relationship fair because of the large trade deficit. The US imports a much larger amount of goods from China than the country exports to China.
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