U.S. and China Reach “Phase One” Trade Deal

After more than a year of heightened tensions, back-and-forth tariffs, and plenty of near misses, it seems that the United States and The People’s Republic of China have reached a preliminary trade deal. As a result both nations are calling off new rounds of tariffs that were set to go into effect. Additionally the U.S. has cut tariffs on some Chinese imports by half.

Word of the deal was first announced by President Donald Trump on Twitter. The President wrote, “We have agreed to a very large Phase One Deal with China. They have agreed to many structural changes and massive purchases of Agricultural Product, Energy, and Manufactured Goods, plus much more. The 25% Tariffs will remain as is, with 7 1/2% put on much of the remainder.” He went on to confirm that the additional tariffs that had been scheduled to take effect on December 15th would be canceled. Those would have impacted $160 billion worth of goods from China including consumer electronics. Meanwhile CNN Business reports that the 25% tariffs will continue to on $220 billion in imports while the 7.5% — formerly 15% — tariffs affect $120 billion in products. For their part, Beijing has also agreed to cancel tariffs that were set to take effect the same day as the U.S.-imposed ones. This round would have put 25% duties on such items as corn and American-made autos.

According to President Trump, this deal is only the beginning. In a follow-up tweet the Commander in Chief wrote, “We will begin negotiations on the Phase Two Deal immediately, rather than waiting until after the 2020 Election.” That potential deal would apparently be more comprehensive than the “phase one” edition.

The deescalation of the U.S.-China trade war was welcomed news for the markets, which have regularly moved up or down as negotiations have been called off and reengaged over the past several months. Of course it’s also potentially good for consumers who would most likely have had to bear the brunt of any new import tariffs (assuming that manufacturers increased their prices accordingly, that is). As for what’s ahead, many are now expecting the United States and President Trump to leverage the remaining tariffs to work toward a new “phase two” deal. However, if past negotiations are any indication, it could be some time before such an agreement is reached. Still this “phase one” deal seems to be a positive step forward for two of the world’s largest economies.


Jonathan Dyer

I'm a small town guy living in Los Angeles looking to make solid financial decisions. I write for a number of finance websites, including HuffingtonPost and Business2Community. I founded DyerNews.com in 2015 to focus on personal finance and the emerging FinTech markets.

Other Articles by Jonathan Dyer

Ness Launches for Health and Wellness-Focused Credit Card

A new premium credit card that puts a heavy emphasis on health and wellness is now launching a public beta. This week, Ness announced the debut of the Ness Card, partnering with a number of top wellness brands in the process. The card is issued by The Bank of Missouri and will operate on the Mastercard network. Starting with rewards, the Ness Card will earn 5 points per dollar spent...

On-Demand Employee Pay Platform Rain Raises $66 Million

A startup that helps employees access their earned wages more quickly and easily has just raised some major funds of its own. This week, Rain announced that it has raised $66 million in equity. The Series A was led by QED Investors and Invus Opportunities, while WndrCo, Tribe Capital, and Dreamers VC also participated. In addition to the equity round, Rain raised an additional $50 million via debt facility, arranged...

TTV Capital Closes Fund VI for Early-Stage FinTech Investments

A major venture capital firm has announced the closure of its latest fund, which will invest in a number of growing FinTech startups. This week, TTV Capital announced the closure of its sixth fund (Fund VI), with a total of $250 million. Capital in this fund was contributed by both new and existing partners, including institutional and strategic investors. According to the firm, initial plans called for the fund to...