As the phase-one talks progress through the final stages, people familiar with the details have said the contours will include U.S. assurances of no additional tariffs and the rollback of existing ones -- a key Chinese demand. The American side wants Beijing’s pledge of billions in purchases of U.S. commodities -- a deliverable Trump wants for his rural base. A date and place to sign the deal still hasn’t been decided.
Stocks in Asia gained and U.S. equities touched new highs on optimism that the countries won’t escalate a tariff war that’s dragged on for 20 months and involves about $500 billion in products traded between them.
Talks on the limited deal have continued since it was first announced in October, with both sides making concessions recently on issues such as food imports, intellectual property and tech giant Huawei Technologies Co. Liu, China’s chief negotiator, said last week that he was “cautiously optimistic” about concluding a phase one deal, but the lack of a deadline and comments from Trump and others have led to speculation that talks could extend into next year.
If a phase-one deal does not materialize before Dec. 15, Trump will have to choose whether to carry out his previous threat to impose 15% tariffs on some $160 billion in imports from China.
Trump said last week that a trade deal with China “can’t be like an even deal” because the U.S. is “starting off from the floor” and China is “already at the ceiling.”
“Key is what happens if we do not get a deal by 15 December,” said Khoon Goh, head of Asia research at Australia & New Zealand Banking Group in Singapore. “Will the U.S. agree to suspend the tariffs out of goodwill?”
Trump is also facing questions at home over how meaningful an interim deal will be and whether it will lead to further rounds of negotiations.
Even if a first phase deal is signed, it is expected to skirt more difficult issues such as U.S. concern about Chinese industrial subsidies and other forms of protectionism. Similarly, from the Chinese side it is unlikely to address what Beijing sees as systematic American attempts to shut out Chinese technology companies from the U.S. market over security threats as well as their access to American components.
The U.S. Commerce Department on Tuesday released new proposed rules that would give it the power to restrict U.S. imports of foreign technology and their use in domestic supply chains and infrastructure.
This story was provided by Bloomberg News.