Jan 15, 2020

U.S. and China sign "phase one" trade agreement

Chinese Vice Premier Liu He and President Trump at the signing ceremony. Photo: Saul Loeb/AFP via Getty Images

President Trump and Chinese Vice Premier Liu He signed Wednesday the "phase one" trade deal between the U.S. and China.

The big picture: The 18-month trade war between the two countries has largely lacked significant breakthroughs, causing major market uncertainty and hammering the U.S. manufacturing industry. This reprieve — which will take effect in 30 days — could help that sector to rebound this year.

Our thought bubble, via Axios' Dan Primack: The deal seems to basically be an agriculture purchase agreement — and does little to address the core issues that the president supposedly cares about.

  • China wanted and needed to purchase agricultural goods anyway.
  • The initial agreement also suspended a planned round of December tariffs by the U.S., but that decision didn't have an impact on American consumers during the holiday season, as those goods had already been imported.

Worth noting: Chinese President Xi Jinping is not in Washington for the occasion — but he did have Liu read a personal letter from him at the event.

  • Trump said in a New Year's Eve tweet that he would head to Beijing "at a later date" to begin talks for the "phase two" deal.
  • The president riffed for over 30 minutes before signing the deal — thanking dozens of politicians and CEOs by name who were scattered around the room.

Read the full agreement — the first time the text has been publicly released:

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The "phase one" deal isn't all that it seems

Vice Premier Liu He and President Trump after signing phase one Wednesday. Photo: Mark Wilson/Getty Images

There was limited fanfare from the stock market after President Trump and Chinese Vice Premier Liu He signed the "phase one" trade deal yesterday.

What happened: The 94-page document will roll back some U.S. tariffs on Chinese goods and see China increase purchases of U.S. goods and services by $200 billion over two years, but it leaves more questions than answers, experts say.

Go deeperArrowJan 16, 2020

China to cut tariffs on $75 billion of U.S. goods

Chinese Vice Premier Liu He and President Trump at the White House on Jan. 15. Photo: Mark Wilson/Getty Images

China will halve tariffs on about $75 billion of imports from the U.S., effective Feb. 14, the country's finance ministry said in statements posted to its website Thursday.

Why it matters: This is another sign of tensions easing in the prolonged trade war between the U.S. and China that's brought major uncertainty to the markets and hurt the U.S. manufacturing industry and farmers.

China touts "phase one" trade deal as next step in its own development

President Trump meets with Chinese President Xi Jinping in Osaka, Japan, June 29, 2019. Photo: Xinhua/Ju Peng via Getty Images

President Trump says the initial trade agreement between the U.S. and China is "righting the wrongs of the past," referring to what he views as China's exploitative economic and trade policies. But Beijing is sidestepping that narrative.

The big picture: Domestically, China is presenting the "phase one" deal not as concessions made to a superior foe, but as the logical next phase of its own economic development.

Go deeperArrowJan 16, 2020