The United States and China have agreed on the terms of a “phase one” trade deal that reduces some U.S. tariffs on Chinese goods while boosting Chinese purchases of American farm, energy and manufactured goods and addressing some U.S. complaints about intellectual property practices. This deal, is scheduled to be signed on January 15, during a ceremony at the White House.
The United States will not proceed with 15% tariffs scheduled to go into effect on Sunday on nearly $160 billion worth of Chinese goods, including cell phones, laptop computers, toys and clothing.
China canceled its retaliatory tariffs due to take effect that same day, including a 25% tariff on U.S.-made autos.
The United States will cut by half the tariff rate it imposed on Sept 1. on a $120 billion list of Chinese goods, to 7.5%.
U.S. tariffs of 25% on $250 billion worth of Chinese goods will remain unchanged, providing U.S. negotiating leverage for a second phase of negotiations next year.
U.S. officials say China agreed to increase purchases of American products and services by at least $200 billion over the next two years, with an expectation that the higher purchases will continue after that period.
The purchases include manufactured goods, agricultural goods, energy and services, and are expected to reduce the $419 billion U.S. trade deficit with China, officials said. China bought $130 billion in U.S. goods in 2017, before the trade war began, and $56 billion in services, U.S. data shows.
China has committed to increase purchases of U.S. agriculture products by $32 billion over two years. That would average an annual total of about $40 billion, compared to a baseline of $24 billion in 2017 before the trade war started.
Trump has demanded that China buy $50 billion worth of American farm goods annually. U.S. Trade Representative Robert Lighthizer said China agreed to make its best efforts to increase its purchases by another $5 billion annually to get close $50 billion.
China has committed to reduce non-tariff barriers to agricultural products such as poultry, seafood and feed additives as well as approval of biotechnology products.
The phase one trade deal also includes stronger protections for intellectual property as well as a pledge from China to refrain from competitive currency devaluations.