A de-escalation of the tariff dispute with China was announced on Wednesday. “Phase one” of the Trump administration’s China trade deal will be “an unbelievable deal for the United States, and both countries for that matter,” President Trump said.
“[Trade is] probably the biggest reason I ran for president,” Trump added.
According to the president, some of the aspects of the deal include:
- Removal of policies that force companies to disclose their technology in order to sell their products in China
- China will greatly expand imports from the U.S. by more than $200 billion over 2017 levels:
- $50 billion on agriculture
- $75 billion on manufacturing
- $55 billion on energy
- $40 to $50 billion on services/financial services
- Protection of intellectual property
- Currency devaluation restrictions
- “Total and full enforceability” on the deal
“We have a sea change in trade. At long last, Americans have a trade policy that puts them first,” he concluded.
American tariffs on Chinese goods will be halved from its September levels of $120 billion. The president had planned on $156 billion in tariffs going into 2020, but this deal changes that.
That stated, existing tariffs on $360 billion of Chinese goods will remain in place despite this deal.
For their part, China has agreed to purchase $200 billion in U.S. goods over the next two years.
At a campaign rally last week, President Trump stated $40 to $50 billion of that will consist of American agricultural products after China all but shut down its U.S. agricultural imports.
According to Reuters, China has never bought more than $26 billion in American agriculture products. Their ability to reach that target range will be something to watch down the road.
Amid the promised purchases, some $28 billion in bailout funds that have been paid to America’s farmers from taxpayers in a bid to stave off the negative effects of the trade war — with an extra $30 billion in extensions passed in the latter part of last year.
Another provision of the compromise, according to reports, is that the U.S. will remove China from its list of international currency manipulators. That designation was officially made by the U.S. last August.
Texas’ three industries that have the most to gain or lose from this deal and the trade war which led up to it are agriculture, energy, and manufacturing, all key components of the Texas economy.
The agriculture industry has been reeling since the tariffs were first imposed.
Laramie Adams, national legislative director for the Texas Farm Bureau, told The Texan, “We are excited to see this moving forward. And we look forward to seeing what all is in the deal.”
“Our farmers have been dealing with a lot of uncertainty and retaliation — especially when it comes to China and their tariffs,” he continued.
Adams added, “Just the fact that they are moving forward with signing a deal, creating more certainty, is much-needed.”
He then pointed to making sure China is held accountable for their misdeeds, whether it’s intellectual property theft or illegally subsidizing their farmers above the World Trade Organization limits. The latter tactic allows Chinese farmers to charge substantially less rate for their products, undercutting the market prices.
“We’re hopeful that it will benefit America’s farmers and ranchers,” he concluded.
Prior to the press conference, Todd Staples, president of the Texas Oil and Gas Association (TXOGA), told The Texan, “We appreciate the president’s leadership to continue to stay at the table with China to bring them to terms for our country, and something that is workable and sustainable.”
“There is no question, the trade war with China has put a strain on US oil and natural gas exporters and so the prospects of a trade deal is welcome news,” he concluded.
Tony Bennett, president and CEO of the Texas Association of Manufacturers, told The Texan, “Texas is the number one exporting state in the country. So this is very good news for Texas manufacturing.”
Bennett specifically mentioned the enforceable mechanisms that are said to be in place to keep China “accountable.”
“China is at the table now because a lot of people think they are struggling with a slowing economy,” and this deal to Bennett, allows U.S. manufacturing to recover after a tough stint during the tariff dispute.
With “Phase One” announced and its implementation moving forward, President Trump stated the work on “Phase Two” will begin immediately.
Just what “Phase Two” will entail remains unclear at the moment.
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Brad Johnson is an Ohio native who graduated from the University of Cincinnati in 2017. He is an avid sports fan who most enjoys watching his favorite teams continue their title drought throughout his cognizant lifetime. In his free time, you may find Brad quoting Monty Python productions and trying to calculate the airspeed velocity of an unladen swallow.