Historic Trade Agreement Signed Between China and U.S.

WASHINGTON, DC – Chinese trade negotiators arrived at the White House Wednesday and signed a comprehensive trade pact known as the Phase One agreement with President Trump. The deal will increase purchases of U.S. manufacturing, energy, and agricultural goods and services by at least $200 billion over two years with an average of at least $40 billion annually of food, agricultural and seafood products. According to the text of the agreement for the category of agricultural goods, no less than $12.5 billion above the 2017 baseline amount will be purchased and imported into China from the United States in the calendar year 2020. U.S. ag exports to China in 2017 were $19.5 billion and would mean Chinese purchases this year of at least $32 billion. For 2021, the amount would equal or exceed $39 billion. Veronica Nigh, an American Farm Bureau Federation economist says the potential to achieve average ag exports to China of $40 billion per year seems obtainable. However, the U.S. will have to fight for market share in order to achieve the export goal and the product mix may be different from what the American farmers have exported in the past. In addition, the Phase One trade deal will bring structural reforms to China’s economic & trade regime in the areas of IP, agriculture, financial services, & tech transfer. Reuters is also reporting that as part of the agreement, the United States will cut the tariff rate it imposed in September on a $120 billion of Chinese goods to 7.5 percent. 25 percent tariffs on $250 billion worth of Chinese goods will remain unchanged, though they could be removed with the conclusion of a Phase Two agreement. Meanwhile, China’s December 15th 25 percent retaliatory tariffs have also been suspended.