The Real Value of the US-China Phase One Trade Agreement

Business experts are of the opinion that the continuous trade conflict between the US and China can accelerate risks to the global economy by stunting supply chains, discouraging investment and slowing down business confidence. The US and Chinese officials have reached phase one deal to defuse a 16-month trade war.

Top trade negotiators for both countries also spoke again and agreed to continue working on the remaining issues. China is insisting that U.S. tariffs be rolled back as part of any “phase one” trade deal.

Some experts said the next date to watch is Dec. 15, when tariffs on about $156 billion in Chinese goods are set to take effect, including holiday gift items such as electronics and Christmas decorations.

“If talks are really going well, that hike will be suspended,” said Christian Whiton, a senior fellow for strategy and trade at the Center for the National Interest, and a former Trump and George W. Bush administration adviser.

The United States and China have several unresolved issues surrounding the bilateral trade between the two countries. The trade deficit between China and the U.S. has swelled immensely as the volume of imports from China grew much more rapidly than U.S. exports to China. According to FP “But the consensus expectation is that Trump and Xi will find a way to reach some sort of truce at a still-to-be-determined meeting next month that would trade limited U.S. concessions for limited Chinese concessions. Stock markets like good trade headlines, even if there’s little substance to back them up, and Trump likes buoyant stock markets.”

The details of any agreement will likely be influenced by the upcoming US presidential election, with Americans set to head to the polls in less than a year. Trump has made confronting China a signature issue for his re-election campaign. The US and China, both sides are already barred from wielding their currencies. President Trump said that the first phase of a trade agreement would include unspecified currency terms on a bilateral level.

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