China may purchase $200 billion in semi-conductors from the U.S.

In a high voltage negotiation between the presidents of the world’s two largest economies — U.S. and China — the leaders reached a temporary truce to address the trade imbalance.

US President Donald Trump agreed to maintain a 10% tariff on $200 billion worth of Chinese goods and to not raise them to 25%, for now. In return, China confirmed its intentions to buy a substantial quantity of various categories of goods, like agriculture or energy, from the U.S to help reduce trade disputes between the two countries.

In light of this agreement, China’s economic-planning agency proposed to make large purchases of U.S. semiconductors with a target set at $200 billion over the next six years – a five-fold increase over current exports.  

This agreement also means some alternation in the export style on the part of the U.S. semiconductor companies. They must now export directly to China rather than sending the chips to a third country where they are assembled and tested.

However, semiconductors have expressed doubts they can at all meet the projected demand of China, as U.S. has exported only $6.1 billion of semiconductors to the region in 2017.

The negotiations between the two presidents will resume next week for a more realistic - and perhaps permanent - outcome.