United States President Donald Trump on January 19 hailed the 'Phase one' trade deal with China for improving relations between both the nations and said that it was 'much better' than he had expected. While addressing a rally in Austin, Texas, Trump reportedly said that the deal is an 'incredible success' for the entire country as it is much bigger and better than he had ever thought. He further also praised the new chapter in relations with Beijing and called it 'the best relationship' that US ever had with China in many years.
The 'Phase one' deal which was signed on January 15 marked a truce between US-China trade wars after nearly two years of tensions. According to the agreement, China pledged to beef up purchases of US agricultural goods and other exports for two years. A Chinese-state run newspaper also hailed the agreement, however, it also warned that it would 'not take much to banjax the deal' and bring tensions to ahead again. Although Trump has repeatedly touted the 'phase one; trade deal as a win for American farmers, who were hit hard by the tariff war.
As a part of the deal, China would purchase $200 billion worth of additional American products over a period of two years. The phase one deal signals a de-escalation in a trade war pitting the two economic giants against each other for nearly two years. However, the US has no plans of lifting the trade tariffs worth about $360 billion, or nearly two-thirds of Chinese imports to the US.
Trade Tariffs were imposed by the Trump Administration as a negotiation tactic to curb the Chinese intrusion into American markets and to pressurise China to agree to a new trade deal that addresses unfair trade practices. Reportedly, the tariffs have affected the American markets too with manufacturers forced to look for alternative sources of raw materials, thereby affecting the supply chain and buying from manufacturers of other Asian countries.
Due to the tariff war, US businesses have been affected forcing owners to make decisions about job cuts and raising prices of products. Businesses and investors are wary of making long term investments due to uncertainty around how long the tariffs will be in place, which in turn has potentially affected the US growth. On the other hand, China has experienced the lowest level of economic growth in 2019, slowest in the past twenty-seven years, due to the trade war between two of the world's most powerful economies.