China and the US have formalized the initial phase of a new trade deal.
The two largest economies in the world have taken a significant step towards resolving their trade conflict, which has created uncertainty among investors and hindered global economic progress over the past year and a half. Chinese Premier Liu He and US President Donald Trump endorsed the agreement in Washington DC. As part of the deal, China has committed to boosting its purchases of US goods and services across various industries by a total of $200 billion over the next two years. In return, the US will reduce some of the tariffs imposed on Chinese goods entering the US market.
Trump praised the signing of the initial trade deal as a victory, while recognizing that more efforts are needed to enhance relations between the US and China. During the signing ceremony at the White House, Trump stated, “Together, we are addressing past grievances and paving the way for a future that ensures economic fairness and security for American workers, farmers, and families.” Liu shared a message from Xi Jinping, who characterized the agreement as a significant step towards resolving conflicts between China and the US through dialogue.
Although the agreement entails an increase in China’s purchases of US agricultural products, China has opted to retain its retaliatory tariffs on US imports. Here is a breakdown of the additional purchases that China will make from the US over the next two years:
- $78 billion in manufactured goods
- $54 billion in energy products
- $38 billion in services
- $32 billion in agricultural commodities
