US President Donald Trump praised the signing of 'phase one' of the trade deal with China and called it “momentous moment” on January 15. In a statement made after the ceremony at White House, Trump said that the step has “never taken before with China”. The deal indicates a de-escalation in the tariff war pitting the world's largest economies against each other for nearly two years. As a part of the accord, China would purchase $200 billion worth of additional American products over a period of two years which according to Trump is “righting the wrongs of the past”. According to the US President, the new development with China will ensure “fair and reciprocal trade”.
Trump has been accusing China of indulging in unfair trade practices contributing to the huge trade deficit amounting to nearly $375 billion. The US President had reportedly warned China that if a deal is not reached by March 1, US will increase the tariffs on the $200 billions of goods from 10 per cent to 25 per cent. Trump has been demanding Beijing to drastically reduce the trade deficit and ensure intellectual property rights production for US technology and services.
However, the deal would roll back some tariffs and Trump reportedly said that it would include additional orders for US agricultural products worth $50 billion. The US President further added that he was confident his country's farmers would be able to meet the increase in demand. China would also reportedly buy $75 billion more in manufacturing goods, and $50 billion more worth of energy supplies.
The deal which has been touted by officials of both the countries will usher a new era for US-China relations. However, it reportedly failed to address several structural differences that motivated the Trump administration to start imposing tariffs on China in the first place. Apparently, these disagreements include Beijing's long-standing practice of holding-up state-owned companies and flooding the international markets with goods at a lower price.
As per international reports, the countries believe the phase one agreement has addressed the issues including technology transfer, intellectual property, trade expansion, along with the establishment of mechanisms to resolve the dispute. While China has called for a rollback of the existing taxes, American officials want an increase in purchases of US farm exports.