Food, toys and smartphones are the products at the centre of the US China Trade deal.
To get the deal done, it seems you have to hit your opponent where it hurts most. 90% of toys imported to the US come from China and the smartphone export market is worth $240.4bn to the Chinese economy.
Hopes are the signing of the US China deal on Wednesday will put an end to the trade war that has trundled on for the last two years.
Last summer, President Trump was losing patience, he wanted China to buy soybeans and other commodities from the US and he threatened to impose raise tariffs on half of what China sells to the US and impost new tariffs on the other half if China didn’t comply with the purchase promise he said they made. China retaliated by suspending buying US farm products.
US farmers were hurt by the action, and the trade war continued.
On the 15th December, President Trump was ready to hit the Chinese manufacturers, in the run up to Christmas, he said he was ready to add $156 billion of new tariffs on smartphones and toys imported into the US.
Talks began and compromises made.
BULLET POINTS:
- China has pledged to buy almost $80 billion of additional manufactured goods from the United States over the next two years as part of a trade war truce, according to a source,
- The Phase 1 agreement calls for Chinese purchases of U.S. agricultural goods to increase by some $32 billion over two years, or roughly $16 billion a year
- Company executives have been waiting eagerly for details of what other U.S. goods China would be buying more of, aside from farm products, after 18 months of tit-for-tat tariffs that have stalled U.S. business investment.
- The $80 billion increase for manufactured goods includes significant purchases of autos, auto parts, aircraft, agricultural machinery, medical devices and semiconductors
- Trump reduced tariffs he had placed on $360 billion of Chinese goods and opted against taxing another $160 billion of imports.
- China agreed to enforce stronger protections for American intellectual property, open its markets to American financial institutions and commit to greater transparency surrounding the management of its currency
- The agreement promises increased purchases of U.S. goods and services, greater access for American firms to China’s banking, insurance and other financial sectors, an end to tariff threats—and a chance to reset relations between the world’s largest economies.
- Even so, the deal isn’t what either side said it had wanted. The U.S. doesn’t get the fundamental reforms in Chinese economic policy it sought to help American businesses. And levies remain on about $370 billion of China’s exports.
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