After almost two years of a trade war between China and the United States, the signing of an armistice is imminent.
The conflict between the two largest economies will not end with the signing of the first part of a comprehensive trade agreement, scheduled for January 15. But the weapons – always new and higher punitive tariffs – should at least remain silent for the time being.
Trump had already announced a breakthrough in talks with the Chinese in October and then again in mid-December. In his announcement on Tuesday, however, he specified a specific date for signing the agreement for the first time. The ceremony will take place in Washington at the White House, and China will send senior representatives, Trump wrote on Twitter. He praised the first phase agreement as a “very large and comprehensive” agreement. “I will travel to Beijing later, where the talks for the second phase will begin,” Trump wrote.
A festive ceremony in the White House, during which Trump is likely to present himself as the winner, should come in handy for the President eight months before the election. His tough course in dealing with China has been well received by many Republican voters. The partial agreement and the associated ceasefire also has the advantage for Trump that it gives new impetus to the growth of the US economy and the stock markets. In view of the complex outstanding issues, experts believe that the second agreement Trump is striving for will probably only come about after the election – i.e. in 2021.
The exact content of the partial agreement has not yet been published. According to the US, the English version of the contract has 86 pages. China is committed to increasing its US imports by $ 200 billion over two years. Of this, at least $ 40 billion a year is expected to benefit US farmers – an important group for Trump with a view to the November election. There should also be agreements on the topics of intellectual property, technology transfer and exchange rates.
In return, the United States waived the imposition of new punitive tariffs on consumer goods such as laptops and smartphones worth around $ 150 billion in December. The 25 percent import fees imposed on goods worth $ 250 billion, which have been imposed since 2018, are set to remain. Additional tariffs of 15 percent on Chinese goods worth around $ 120 billion are to be halved. Trump has described the continued punitive tariffs as key assets in the negotiations for the second phase agreement.
It is still unclear whether the first agreement also provides for monitoring and enforcement mechanisms, as Washington has requested. Should China, from the US government’s point of view, fail to fulfill its promises like higher imports, new threats could arise. But that too will probably only be an issue for the next US president – either for Trump, who is applying for a second term, or for a possibly victorious Democratic candidate.
Trump had already announced a partial settlement in the trade conflict he had instigated in October. The signing in November did not come about. In mid-December, it was said that both sides were now in agreement, only the finishing touches and translations were missing.
The trade war between the two major powers is weighing on the global economy and is slowing economic growth in China in particular. The partial agreement marks a turning point towards de-escalation. However, it is also a bitter victory for Trump: he had long insisted on only agreeing to a comprehensive trade agreement with China. However, this failed due to Beijing’s resistance, whereupon there was first talk of a partial agreement in October.
Trump originally started the trade war out of anger that China is exporting far more to the US than vice versa. Among other things, Washington called on Beijing to open the market, fight against copyright theft and reduce state subsidies. Trump was also particularly keen to boost the sale of agricultural products such as corn and soybeans to China.