Shortly following a United States promise to cut tariffs on $120 billion in Chinese goods, China has expressed its intention to uphold promises made in recent trade agreements to halve tariffs on $75 billion in United States goods. These tariff cuts include products like automobiles and crude oil, according to China’s Ministry of Finance.
This trade agreement, known as the Phase One Deal, also addresses issues such as those of the management of technology transfer, macroeconomic policies and currency, and dispute resolution. This agreement is set to take effect on February 14, 2020. The most important aspect of this new deal is a promise from China to buy an additional $200 billion of US goods over the next two years. These goods will include food and farm products, as well as services and energy.
This deal comes shortly after China’s December outbreak of the Wuhan Coronavirus, which has introduced additional pressure on the economy and on international trade. Factories across the country have been forced to close, resulting in a decrease in production capabilities.
Despite the circumstances, stock markets around the world have already begun to reflect the potential of the new trade agreement. Asian stock markets, notably Hong Kong’s Hang Heng and Japan’s Nikkei 225, have seen positive results, both rising by 2.6% following the announcement of this new trade agreement. The Nasdaq rose 0.1%, while the Dow and S&P 500 saw an increase of 0.2%. the Phase One Deal signifies a promising start to de-escalation of the trade war between the US and China.
Works Cited
"China halves tariffs on more than 1,700 US goods." Bbc.com, BBC, 6 Feb. 2020, China halves tariffs on more than 1,700 US goods. Accessed 9 Feb. 2020.
Goodman, Matthew P., et al. "What's Inside the U.S.-China Phase One Deal?" CSIS.org, 15 Jan. 2020, www.csis.org/analysis/whats-inside-us-china-phase-one-deal. Accessed 9 Feb. 2020.
Klebnikov, Sergei. "China Set To Halve Tariffs On $75 Billion Of U.S. Goods." Forbes.com, Forbes Media, 6 Feb. 2020, www.forbes.com/sites/sergeiklebnikov/2020/02/06/china-set-to-halve-tariffs-on-75-billion-of-us-goods/#105e40ee5e41. Accessed 9 Feb. 2020.
McArdle, Mairead. "China Halves Tariffs on $75 Billion in U.S. Goods as Part of Phase One Trade Deal." Nationalreview.com, National Review, 6 Feb. 2020, www.nationalreview.com/news/china-halves-tariffs-on-75-billion-in-u-s-goods-as-part-of-phase-one-trade-deal/. Accessed 9 Feb. 2020.
Varas, Jacqueline. "The Details of Trump's Phase One Trade Deal with China." Americanactionforum.org, 21 Jan. 2020, www.americanactionforum.org/insight/the-details-of-trumps-phase-one-trade-deal-with-china/. Accessed 9 Feb. 2020.
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