The United States and China cooled their trade war on Friday, announcing a “Phase one” agreement that reduces some U.S. tariffs in exchange for what U.S. officials said would be a big jump in Chinese purchases of American farm products and other goods.
– We have agreed to a very large Phase One Deal with China – U.S. President Donald Trump tweeted Friday morning.
Officials in China have “agreed to many structural changes and massive purchases of Agricultural Product, Energy, and Manufactured Goods, plus much more,” he said, Reuters reports.
In the meantime, the United States Trade Representative (USTR) announced that the United States has agreed to modify its Section 301 tariff actions in a significant way and that China will make substantial additional purchases of U.S. goods and services in the coming years.
Under the agreement, the United States will be maintaining 25 percent tariffs on approximately USD 250 billion of Chinese imports, along with 7.5 percent tariffs on approximately USD 120 billion of Chinese imports.
The press release adds that the trade deal requires structural reforms and other changes to China’s economic and trade regime in the areas of intellectual property, technology transfer, agriculture, financial services, and currency and foreign exchange. Importantly, the agreement establishes a strong dispute resolution system that ensures prompt and effective implementation and enforcement, the USTR said.
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