On Friday President Donald Trump announced his administration and China had reached a partial trade agreement. While Trump has referred to the agreement as a “fantastic deal,” the agreement is limited in scope, with parts of it still unwritten, and yet to be signed by both parties.
So far, the deal includes a commitment by China to buy $40 billion to $50 billion of American agricultural products per year—a huge increase over the $25.5 billion China was buying in 2016, pre-trade war. The agreement also considers a pledge by China to open its markets to American financial services firms; the inclusion of measures concerning intellectual property; new guidelines for how China manages its currency; and the suspension of a U.S. tariff increase on Chinese goods that was scheduled for Tuesday of this week. However, the suspension is separate from another tariff hike set for December 15 or on other tariffs placed in September. On Thursday China’s Ministry of Commerce spokesman Gao Feng said the U.S. must first remove tariffs to reach a final agreement.
Although this partial agreement managed to temporarily cool tensions between China and the U.S., Trump’s aggressive trade approach will leave a lasting effect on the global economy. On Wednesday, Trump teased the idea of imposing tariffs on the European Union if the bloc was unwilling to reduce the trade imbalance between the U.S. and the EU.
Luckily, on the USMCA front, things seem to be looking up. On Thursday, House Speaker Nancy Pelosi said negotiations between the Trump administration and Democrats are close to wrapping up. Democrats were pleased by Mexican President Andrés Manuel López Obrador’s $900 million pledge to implement a law to improve labor conditions. U.S. Trade Representative Robert Lighthizer is scheduled to meet with the USMCA working group today to keep pushing toward a deal. Pelosi dismissed concerns by Republicans that the impeachment inquiry was stopping Congress from passing the deal, but argued that Democrats are not close to passing it because “we don’t have the enforceability assurance that we need to have.” Democrats hope to get a deal done this year.
