US$150B in tariff hikes averted . . .
China and the U.S. have concluded phase one of a trade agreement that has prevented another wave of tariff hikes that would have hurt both superpower economies and sent ripples through the world economy. The agreed-upon text contains nine chapters including: intellectual property rights, food and agricultural products, financial services, exchange rate and transparency, trade expansion, and bilateral assessment and dispute settlements, along with a preface and final terms on implementation.
The devil is in the details . . .
While market experts and global stock exchanges cheered, the parties are only buying time. Official media in China stress that the agreement is based on the principle of equality and mutual respect, while the U.S. is maintaining US$360 billion in tariffs on a broad range of Chinese goods. Robert Lighthizer, the U.S. Trade Representative, said the deal is dependent on a tricky implementation process in the coming months.
Consequences beyond the U.S. and China . . .
Neither the U.S. nor China has backed away from limitations on and surveillance over specific technology companies: Huawei in the U.S., and China’s list of American “unreliable entities.” Canada has been an unwilling participant in the bilateral superpower spat hoping for some U.S. help to release two Canadians – Michael Kovrig and Michael Spavor – being held in China while Huawei CFO Meng Wangzhou is awaiting a hearing in Vancouver following her arrest on a U.S. extradition warrant a year ago. No specific mention of these cases was made during the announcement, and the two governments released only a fact sheet of the agreement and not its complete 86 pages.
- Bloomberg: Trump trade deal buys Xi time
- Office of the United States Trade Representative: United States and China reach phase one trade agreement
- Xinhuanet: China, U.S. agree on text on phase one trade deal