A couple of hours ago there were reports that a new trade agreement had been reached between the US and China which was just awaiting President Trump’s approval. Now Politico is reporting Trump has signed off:
President Donald Trump has signed off on a mini-trade deal with China, two people familiar with the negotiations said on Thursday, marking another trade victory he can tout as he faces impeachment led by House Democrats.
The tentative agreement, which Trump refers to as “phase one” deal, codifies what was agreed to in principle in October. It will require China to significantly increase its purchases of U.S. agricultural goods, open its financial services sector and enact new intellectual property protections.
In exchange, Trump will cancel a 15 percent tariff that was scheduled for Sunday, people briefed on the matter said. The president is also expected to reduce duty rates already in place on about $250 billion worth of goods, including many consumer items such as footwear, clothing and flat panel TVs.
Trump had suggested this was coming in a tweet earlier today:
Getting VERY close to a BIG DEAL with China. They want it, and so do we!
— Donald J. Trump (@realDonaldTrump) December 12, 2019
Politically, the timing of this is obviously good for the president. He can claim another win on trade just two days after a US-Mexico-Canada trade deal to replace NAFTA was approved in principle by Nancy Pelosi. The vote on that deal is set to take place next week. Pelosi actually took some heat for handing Trump a win in the same week he is being impeached.
But more important than the partisan win is the possible end to at least a portion of the trade war with China. That should result in some price relief on consumer goods and even stronger economic growth in the near term. All of that is bound to help the stock market and public perception of the strength of the economy. But for now, supporters of the deal are already praising it as a positive step forward:
“That is excellent news. It puts a floor under the deterioration in the relationship,” said Craig Allen, president of the U.S.-China Business Council.
Myron Brilliant, executive vice president of the U.S. Chamber of Commerce, said the deal would benefit American manufacturers and farmers. “It’s an important first step, but just a first step,” he said. “There is more work to be done.”
According to Politico, Trump has previously said this deal is 60 percent of what he wants. But there’s still a lot more to do and it may be harder to exert leverage on China after this deal. Still this looks like a win.