All Eyes on US-China Phase One Trade Deal

  • Jan 15, 2020 AEDT
  • Team Kalkine
All Eyes on US-China Phase One Trade Deal

The US President Donald Trump and Chinese Vice Premier Liu He are expected to sign a partial trade deal scheduled on 15 January 2020 (11:30 AM) to bring some relief for the international economy.

The Phase one deal is expected to ensure China making $200 billion additional purchases of US goods, ,taking care of forced technology transfer and other pledges on intellectual property and currency, in exchange for a rollback in certain tariffs and an indefinite hold on further retaliatory measures out of US.

ALSO READ: US Lifts Currency Manipulator Tag Off China; Switzerland added to the Watch List

Last news from the White House hinted towards the trade tariffs expected to remain until the US presidential elections in 2020.

The joint statement from the US Trade Representative's office and Treasury stresses no accord for future cutback in tariffs, claiming the rumours to be categorically false.

As on 13 December 2019, news about the United States agreeing to phase out tariffs on Chinese goods, were a piece of hot-selling update in the international market.

However, the existing tariffs on several Chinese goods coming into the US are expected to stay in place.

Chinese goods would continue to bear US tariffs until the two countries reach an enforceable Phase two agreement. The chemical and auto parts manufacturers and apparel retailers shall continue to bear the same tariffs they have been facing for some time.

The long-standing trade tensions between the US and China had found a breakthrough when the two countries reached a consensus agreement for a phase one deal that was expected to terminate additional tariff escalations and slash some of them already in place.

The text for the US China trade deal is expected to be released on Wednesday and shall further show disbelievers that a Phase one US-China trade agreement shall be fully enforceable, including a pledge by China to refrain from manipulating its currency.

Around 18 months of the eye-for-eye events between the US and China has fuelled trade tensions, stagnated US business investments and dulled global growth.

In a scenario of growing tensions in the past and no solution nearing to close the issue, the phase one deal is seen by many as a gateway to cover several negotiations made outside the phase one deal.

However, US Government representative termed “misreporting” for anything that states two largest economies of the world to have concluded agreements outside the Phase one trade deal.

Stating the denials about the speculations regarding any side agreements; it shall only be when there is a Phase two of the agreement which is fully enforceable, the President shall reduce the tariff.

Bottomline

As the US and China brace themselves to develop a consensus to calm the flaming trade tensions through phase one of the deal, we can expect slight normalcy in the international trade among US and China.

However, recent bombing and retaliations between the US and Iran have only added to the burning flames of international trade tensions.

We look forward to a more stabilised flow of business among the nations and a more growing world economy.


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