President Trump signed a landmark trade agreement with China, heralding a period of detente in a trade war between the world’s two largest economies fueled by decades of complaints that Beijing was manipulating its currency and stealing trade secrets from American firms.

The pact, detailed in a 94-page document, is only the initial phase of a broader deal that Trump has said may come in as many as three sections.

“Together, we are righting the wrongs of the past,” Trump said in a pomp-filled signing ceremony. “It doesn’t get any bigger than this.”

WHY ‘PHASE ONE’ CHINA TRADE DEAL DOESN’T NEED CONGRESSIONAL APPROVAL, UNLIKE USMCA

The agreement will help grow the U.S. economy in 2020 and 2021 by “at least a half a point of additional GDP” and “probably translate into another million jobs on top of what we’ve already done,” Larry Kudlow, director of the National Economic Council, told FOX News’ “America’s Newsroom” on Wednesday.

President Trump signs a trade agreement with Chinese Vice Premier Liu He, in the East Room of the White House, Wednesday. (AP Photo/Evan Vucci)

During two years of negotiation, there were occasional setbacks because “on some issues, we don’t see eye to eye,” noted Liu He, the Chinese vice premier who represented President Xi Jinping at the signing, but “our economic teams didn’t give up.”

The agreement, which was first reported on Dec. 12, includes commitments from Beijing to halt intellectual property theft, refrain from currency manipulation, cooperate in financial services and purchase an additional $200 billion of U.S. products over the next two years.

STOCKS CELEBRATE PHASE ONE TRADE DEAL WITH RECORD HIGHS

The purchases will include up to $50 billion of U.S. agriculture, according to Trump and Treasury Secretary Steven Mnuchin, $40 billion of which has been confirmed by Chinese sources. China will also buy $40 billion in services, $50 billion in energy and $75 billion to $80 billion worth of manufacturing, the sources said.

Trump acknowledges Vice President Mike Pence, Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer. (AP Photo/Evan Vucci)

Lighthizer says the deal is “fully enforceable” if Beijing fails to live up to its end of the agreement, and the pact includes mechanisms for handling violations of intellectual property rights. Its dispute-resolution process will allow either side to appeal if it believes the other is “not acting in accordance” with the agreement.

The document specifies that both China and the U.S. “shall ensure fair and equitable market access” for businesses that depend on the safety of trade secrets. Specific measures that will protect pharmaceutical firms’ intellectual property, govern patents, block counterfeiting on e-commerce platforms and prevent exports of brand-name knockoffs are detailed.

THE US IS NOW IN A PRIME POSITION TO MEET CHINA’S RAVENOUS ENERGY NEEDS

In return, the U.S. will reduce tariffs on some products made in China, but keep duties the White House has imposed on $375 billion worth of merchandise. Following the phase-one signing, $250 billion of Chinese imports will still be subject to a 25 percent tariff and $125 billion of Chinese goods will be under a 7.5 percent levy.

“These tariffs will stay in place until there is a phase two,” Treasury Secretary Steven Mnuchin told FOX Business’ Lou Dobbs. “If the president gets a phase two quickly, he’ll consider releasing tariffs as part of phase two. If not, there won’t be any tariff relief. It has nothing to do with the election or anything else. There’s no secret agreement.”

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Trump says phase two negotiations will begin “immediately,” though he pointed out Wednesday that China is “doing many more things in phase one than anyone thought possible.”

Source: https://www.foxbusiness.com/markets/us-china-sign-historic-trade-deal

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U.S. President Donald Trump on Friday sought to ease concerns about his administration’s failure so far to reach a trade deal with China, writing on Twitter that despite a new round of tariffs that went into effect overnight, there is “no need to rush” negotiations with Beijing.

“Talks with China continue in a very congenial manner – there is absolutely no need to rush,” he wrote on Twitter, repeating his false claim “massive payments” from China would be deposited “directly to the Treasury of the U.S.” In reality, tariffs are taxes paid by importers, such as U.S. companies, which bring in products from China. Those costs are typically passed on to consumers in the form of higher prices, which can drive down demand for Chinese imports.

Tariffs on $200 billion in Chinese goods increased to 25 percent at midnight on Friday after negotiations Thursday night failed to reach a deal. U.S. officials had said earlier this week that China “reneged” on its commitments it had previously agreed to.

Talks between Chinese Vice Premier Liu He, U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are set to continue Friday as they work to break the logjam that has resulted in a tit-for-tat tariff war with Beijing that has escalated over the last year.

China has vowed to implement retaliatory tariffs in response to Trump’s move, but its Foreign Ministry also said it would “work together to resolve existing problems through cooperation and consultation.”

“Trump also floated the idea of using revenue from agricultural goods to fund domestic priorities”

Trump, though, signaled that he is perfectly happy to impose tariffs as long as Beijing refuses to accede to his administration’s demands.

“The process has begun to place additional Tariffs at 25% on the remaining 325 Billion Dollars. The U.S. only sells China approximately 100 Billion Dollars of goods & products, a very big imbalance,” Trump wrote Friday.

He said that his administration would offer support for U.S. farmers whose businesses have been crippled by Trump’s trade war with China, proclaiming that the government “will buy … agricultural products from our Great Farmers, in larger amounts than China ever did, and ship it to poor & starving countries in the form of humanitarian assistance.”

Vice President Mike Pence also suggested as much Thursday, saying during a visit to a Minnesota farm that “we have already had preliminary discussions in the White House for additional support for farmers if this impasse with China continues.”

But while Trump expressed confidence that negotiations would get back on track, Trump also claimed that the new tariffs “will bring in FAR MORE wealth to our country than even a phenomenal deal of the traditional kind,” adding that his approach was “much easier & quicker to do.”

He added: “Our Farmers will do better, faster, and starving nations can now be helped. Waivers on some products will be granted, or go to new source!”

Trump also floated the idea of using revenue from agricultural goods to fund domestic priorities like infrastructure or health care.

“If we bought 15 Billion Dollars of Agriculture from our Farmers, far more than China buys now, we would have more than 85 Billion Dollars left over for new Infrastructure, Healthcare, or anything else,” he said, though he did not offer any specifics for his plan. “China would greatly slow down, and we would automatically speed up!”

Still, he added, “in the meantime we will continue to negotiate with China in the hopes that they do not again try to redo deal!”

He also suggested that there was a simple solution for manufacturers concerned about the penalties: “Build your products in the United States and there are NO TARIFFS!”

Source: https://www.politico.eu/article/trump-trade-war-china-tariffs/

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European Commission Vice President Jyrki Katainen and Chinese Vice Premier Liu He shake hands in Beijing on June 25   © Reuters

BEIJING (Kyodo) — China and the European Union agreed Monday to work in tandem to tackle trade protectionism, with U.S. President Donald Trump starting to impose higher tariffs on imports from those areas in a bid to protect domestic firms.

“Both sides agree to firmly oppose unilateralism and protectionism and prevent such practices from impacting the world economy or even dragging the world economy into recession,” China’s State Council Vice Premier Liu He said in a speech.

The remarks by Liu, a top economic adviser to President Xi Jinping, came after he held a China-EU high-level economic and trade dialogue with European Commission Vice President Jyrki Katainen in Beijing.

China and the European Union have committed to “promote economic globalization that is more open, inclusive, beneficial to all, balanced, mutually-beneficial and win-win to reform the multilateral trading system,” Liu added.

Katainen said at a press conference later in the day that the two sides confirmed the importance of conducting international trade under the rules of the World Trade Organization.

The United States has started to impose higher tariffs on steel and aluminum imports from major trading partners, including China and the European Union.

Moreover, Trump has threatened to impose a 20 percent tariff on U.S. imports of all European Union-assembled cars, saying on Twitter, “Build them here!”

The U.S. government has also announced it will put into effect on July 6 additional 25 percent tariffs on Chinese imports worth $50 billion for alleged intellectual property theft, with Trump urging Beijing to reduce its huge trade surplus with the United States.

The U.S. goods trade deficit with China totaled $375.23 billion last year, nearly half the U.S. goods trade deficit globally, according to U.S. Commerce Department data.

Both China and the European Union have already decided to implement retaliatory measures against the United States.

Katainen, meanwhile, indicated at the news conference that the European Union and China have been at odds over Chinese technology-transfer practices, which the regional bloc has called “unfair.”

Source: https://asia.nikkei.com/Economy/China-and-EU-agree-to-work-together-to-tackle-Trump-s-higher-tariffs

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