No one likes trade wars, but we continue to see evidence that tariffs (combined with economic strength) work. Bloomberg posted an article on Thursday (updated Friday) about the recent trade agreement reached between the United States and China.The article notes that the tentative agreement was reached just as more tariffs were due to go into effect against China on December 15th. Because of the tentative agreement, the tariffs are postponed.
The article reports:
President Donald Trump signed off on a phase-one trade deal with China, averting the Dec. 15 introduction of a new wave of U.S. tariffs on about $160 billion of consumer goods from the Asian nation, according to people familiar with the matter.
The deal presented to Trump by trade advisers Thursday included a promise by the Chinese to buy more U.S. agricultural goods, according to the people. Officials also discussed possible reductions of existing duties on Chinese products, they said. The terms have been agreed but the legal text has not yet been finalized, the people said. A White House spokesperson declined to comment.
While there was no official confirmation from the government in Beijing on Friday, an announcement is expected in Washington as early as today, according to people familiar with the Americans’ plans. One possible option is for U.S. Trade Representative Robert Lighthizer to sign the agreement with Chinese Ambassador Cui Tiankai, according to people briefed on the matter.
When the agreement was announced, global stocks soared to record highs.
The article concludes:
In addition to a significant increase in Chinese agricultural purchases in exchange for tariff relief, officials have also said a phase-one pact would include Chinese commitments to do more to stop intellectual-property theft and an agreement by both sides not to manipulate their currencies.
Put off for later discussions are knotty issues such as longstanding U.S. complaints over the vast web of subsidies ranging from cheap electricity to low-cost loans that China has used to build its industrial might.
Nothing is at yet cast in stone. Stay tuned.