US-China Trade Deal Singed, China To Buy $200 Billion American Products Over Two Years

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The much talked about phase-1 trade deal between two of the world's strongest economic powers the United States and China was signed on Wednesday, January 15

Written By Pritesh Kamath | Mumbai | Updated On:

The much talked about phase-1 trade deal between two of the world's strongest economic powers the United States and China was signed on Wednesday, January 15. As a part of the deal, China would purchase $200 billion worth of additional American products over a period of two years.

Ahead of signing the deal, Trump had addressed the media stating, "We're signing, as you know, a very big deal among many other things with China...probably on January 15".

READ | Phase-I Trade Deal Includes China Buying USD 200 Bn American Products Over Two Years: US

The phase one deal signals a de-escalation in a trade war pitting the two economic giants against each other for nearly two years.

Trump, who has been accusing China of indulging in unfair trade practices contributing to the huge trade deficit amounting to $375 billion, had earlier warned that if a deal is not reached by March 1 i.e. the end of the 90-day grace period, the US will increase the tariffs on the $200 billions of goods from 10% to 25%.

READ | US In No Plans Of Lifting $360 Billion Worth Of China Tariffs Despite Phase-1 Deal

Trump has been demanding China to drastically reduce the trade deficit and ensure Intellectual property rights production for US technology and services.

Despite the signing of the Phase-1 trade deal between the US and China which comes as a ray of hope for de-escalating the tension between the two sides, the US, however, has no plans of lifting the trade tariffs worth about $360 billion, or nearly two-thirds of Chinese imports to the US.

READ | Asian Shares Rise Ahead Of US-China ‘Phase 1’ Trade Deal

US-China Trade War

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, such as intellectual property theft and forced technology transfers.

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.

READ | Trade Analysis On US-China Trade Going Forward

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