President Trump has agreed to an initial trade agreement with China that will roll back existing tariff rates on Chinese goods and cancel new levies set to take effect Sunday as part of a deal to boost Chinese purchases of U.S. farm goods and obtain other concessions, the Wall Street Journal reports, citing “people familiar with the matter.”
Michael Pillsbury, an adviser to the president, said he spoke with Mr. Trump, who said the deal calls for China to buy $50 billion worth of agricultural goods in 2020, along with energy and other goods. In exchange the U.S. would reduce the tariff rate on many Chinese imports, which now ranges from 15% to 25%.
The Wall Street Journal reported earlier Thursday that the U.S. side has offered to slash existing tariff rates by half on roughly $360 billion in Chinese-made goods, in addition to canceling the tariffs on $156 billion in goods that Mr. Trump had threatened to impose on Sunday. That offer was made to Beijing in the past five days or so.
Should Beijing fail to make the purchases it has agreed to, original tariff rates would be reimposed. Trade experts call that a “snapback” provision, though the president didn’t use that term, Mr. Pillsbury said.
“The president is upbeat and enthusiastic about his breakthrough,” according to Mr. Pillsbury, a China scholar at the Hudson Institute who advises the Trump administration.
The president has stressed that a so-called phase one deal—which also includes measures to improve intellectual property protection, open the Chinese financial services market and prevent currency manipulation—is expected to lead to a phase two deal. That agreement would tackle more difficult problems, including forced-technology transfer, subsidies, and the behavior of Chinese state-owned firms.
MacDailyNews Take: Update, 9:38am ET: President Trump disputes the content of the WSJ article above:
The Wall Street Journal story on the China Deal is completely wrong, especially their statement on Tariffs. Fake News. They should find a better leaker!
— Donald J. Trump (@realDonaldTrump) December 13, 2019
Again, here’s hoping “Phase One” starts the U.S. and China on the road to a more balanced relationship.
I’m cognizant that in both the U.S. and China, there have been cases where everyone hasn’t benefited, where the benefit hasn’t been balanced. My belief is that one plus one equals three. The pie gets larger, working together. — Apple CEO Tim Cook, March 24, 2018
The United States is insisting that all countries that have placed artificial Trade Barriers and Tariffs on goods going into their country, remove those Barriers & Tariffs or be met with more than Reciprocity by the U.S.A. Trade must be fair and no longer a one way street!
— Donald J. Trump (@realDonaldTrump) June 24, 2018
At least half of the popular fallacies about economics come from assuming that economic activity is a zero-sum game, in which what is gained by someone is lost by someone else. But transactions would not continue unless both sides gained, whether in international trade, employment, or renting an apartment. — Thomas Sowell, June 14, 2006