MNI POLICY: US-China Deal Still Leaves Substantial Tariffs

--Dec. 15 Tariffs on Chinese Goods Delayed On Phase 1 Agreement

By Evan Ryser

     WASHINGTON (MNI) - The United States and China have reached a "Phase One"

trade deal removing the threat of Dec. 15 tariffs but leaving in place

substantial tariffs on roughly $370 billion worth of China's goods entering

America. 

     The United States will be maintaining 25% tariffs on approximately $250

billion of Chinese imports, roughly half of China's goods entering America,

along with lowering tariffs to 7.5% from 15% on approximately $120 billion of

Chinese imports first implemented in September, according to the USTR and a

Tweet by President Donald Trump. 

     "The Penalty Tariffs set for December 15th will not be charged because of

the fact that we made the deal," Trump wrote on Twitter. 

     The agreement requires structural reforms and other changes to China's

economic and trade regime in the areas of intellectual property, technology

transfer, agriculture, financial services, and currency and foreign exchange,

the USTR said in a statement released after a press conference in Beijing

confirming an agreement.

     The Phase One agreement also includes a commitment by China to make

substantial additional purchases of U.S. goods and services in the coming years,

the USTR said. "The agreement includes a dispute resolution system aimed at

enforcement."  

     Both parties will move to a legal review and translation proofreading soon,

and negotiate the specific arrangements for a formal signing.

     -- MIXED RESPONSES 

     The agreement received a mixed response in the United States with cheers at

a first step toward reducing conflict in the bilateral relationship but with

hopes that Friday's announcement will be built on further in 2020. 

     Senate Finance Committee Chairman Chuck Grassley called the deal a positive

development. "Easing tensions and lowering tariffs is welcome news. This paves

the way for a broader agreement that must address non-tariff barriers and

intellectual property issues." 

     "President Trump has sold out for a temporary and unreliable promise from

China to purchase some soybeans," the top Democrat in the U.S. Senate, Chuck

Schumer, said. 

     Former Treasury Secretary Hank Paulson said it is only a first step toward

completing a comprehensive trade agreement but it demonstrates that leaders in

both countries can accomplish important things. 

     Myron Brilliant, executive vice president at the U.S. Chamber of Commerce,

urged the Trump administration to keep its eyes on the prize. "We call upon both

governments to continue working diligently toward a final agreement within six

months."

     The Business Roundtable welcomed the agreement but pushed further for

additional structural reforms. "We encourage the U.S. to work with allies to

strengthen and sustain such reforms."

--MNI Washington Bureau; +1 202 371 2121; email: evan.ryser@marketnews.com

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