US-China announce Phase One of trade deal

On Friday, the U..S and China initially announced their agreement on the “Phase One” trade deal. While that might have assuaged trade war fears, certain elements of the apparent truce still remain unclear for now.

Thanks to the phase one agreement, China held off tariffs that were scheduled for Sunday on US goods. The proposed tariffs would have included U.S. autos and parts., and  corn and other grains. The US also withdrew from its prior plan of slapping 15% tariffs on $160 billion worth of Chinese imports by Sunday.

 Reuters reported that U.S. Trade Representative Robert Lighthizer told reporters that China would buy at least $16 billion more agricultural goods in each of the next two years,  adding to the 2017 baseline of $24 billion. The report also mentions that Beijing agreed to try for $5 billion more in additional purchases each year – that would leads to total additional purchases  of $40 billion to $50 billion.

 Some existing tariffs on U.S. imports to China remain, just as the U.S. maintains its already-imposed tariffs ranging from 7.5% to 25% on about $370 billion of Chinese goods.  White House economic adviser Larry Kudlow told Fox News' Maria Bartiromo that he sees the existing 25% tariffs on $250 billion on China  as "insurance" to get China’s compliance with a deal. 

Lighthizer indicated that the phase one deal includes structural changes by China such as commitments on ending pressure for U.S. companies to transfer their technology, and improved protections for intellectual property.

However, the phase one deal’s success could critically depend on whether and by how much the U.S. will roll back other tariffs, and when.

Both China and the U.S. would still need to officially sign the agreement, which Chinese officials said requires legal review. Lighthizer said both countries hope to sign the deal in Washington in early January.

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Sergey Savastiouk|Expert

Sergey Savastiouk, Ph.D. has a degree in Applied Mathematics from Moscow University and has extensive experience as an entrepreneur, investor, manager, and mathematician. His professional expertise is in applied mathematics, mathematical modeling, system and pattern analysis, and software and hardware system integration. He has served as the CEO of several hi-tech start-up companies and nonprofit organizations, which has given him proven capabilities in business strategy for high-tech start-up companies, market assessment, company formation, team building, product development, marketing, and sales. He has published numerous articles in journals and magazines on related fields. As a retail investor, he spent 15 years developing his proprietary trading and quantitative algorithms (now Tickeron’s A.I.), which brought him significant returns in trading the stock market. His current work and goal in founding Tickeron is to bring professional, sophisticated stock market analysis capabilities to retail investors via an easy-to-use interface.

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