The "Phase One Trade Agreement" relieves global uncertainty by lowering tensions between the U.S. and China.
U.S. President Donald Trump and Chinese Vice Premier Liu He Wednesday will sign the so-called “Phase One” of an agreement rolling back some tariffs and defusing the "Trade War" which the Republican ruler initiated in March 2018 when he imposed tariffs on Chinese products.
According to what is known about this 86-page deal, which provides Trump with relief in an election year, China will buy U.S. products worth US$200 billion in the next two years.
This amount would be distributed among manufacturing products (up to US$80 billion), energy goods (US$50 billion), services (US$35 billion), and agricultural products (up to US$40 billion).
U.S. farmers are among the economic groups most affected by the consequences of a Make-America-Great-Again economic policy which has sunk them.
Since Trump began his trade war, bankruptcies among farmers have skyrocketed 24 percent and their debts have reached unprecedented levels, which forced the U.S. government to create a US$28 billion aid package.
The impact on the US economy, however, has been much greater. The conservative think tank Tax Foundation argues that the impact reaches at least US$88 billion.
The Department of Commerce admitted that U.S. companies have paid US$40 billion in additional tariffs and a Federal Reserve study indicates that international trade taxes "have not boosted employment or production."
The U.S. will also cancel tariffs for US$156 billion that would have been applied mainly to mobiles, computers, and other high-tech goods, many of which were manufactured by U.S. companies within the Asian country.
The Trump administration will decrease from 15 percent to 7.5 percent tariffs imposed on other Chinese products in September 2019, which affected a commercial flow of US$120 billion.
For its part, China partially opens its markets to U.S. banking, insurance, and financial services companies, which will be able to start operating in its territory without the need for Chinese partners.
.@microsoft CEO @BradSmi leads off today’s US-China Series event, laying out a realistic assessment of the state of play and key issues of the relationship, including that there is no single internet. That there is a tech cold war. But despite the challenges, calls for optimism. pic.twitter.com/CFkDLzarFO— Nigel Cory (@nigelcory) January 15, 2020
Technology transfer is no longer an obligation that U.S. companies must comply with and U.S. intellectual property is reinforced with measures not yet specified.
The Phase 1 agreement, however, does not address some traditional conflicts in the bilateral economic relationship between these countries.
Among them is the elimination of subsidies that the Chinese state provides to its industrial companies, a development policy that President Xi would seem unwilling to suppress.
Trump will also maintain tariffs worth US$360 billion, which means that almost two-thirds of Chinese goods arriving in the United States will continue to be punished.
About 25 percent of these products are related to vehicle components, which will remain relatively more expensive for U.S. consumers.