WASHINGTON — U.S. President Donald Trump said the U.S. and China have reached what he called a substantial “phase one“ deal in which Beijing agreed to limited measures to improve trade ties between the countries.
In exchange, Trump will not move forward with another round of tariff increases against roughly $250 billion in Chinese goods that had been set to take effect on Tuesday.
The announcement indicates an easing of trade tensions between the worlds two largest economies after several political and economic actions increased pressure in recent days, including the Trump administration blacklisting several Chinese firms from doing business with U.S. companies.
In an Oval Office meeting Friday afternoon with Chinese Vice Premier Liu He, Trump said the provisional deal would take another three weeks to write and would be concluded around mid-November.
The tentative agreement, however, falls short of a broader deal addressing the most significant U.S. concerns over Chinas state-run economy that sparked the trade fight.
Derek Scissors, a China expert at the American Enterprise Institute who sometimes advises the White House, said U.S. businesses arent gaining many concessions from Beijing.
“What the U.S. is getting is purchases and several elements of nonsense,” Scissors said before the announcement. “Today seems to be another China-is-Great day, but future talks face a higher risk.”
Trump said there would be a second phase of negotiations, and added that he would sign the first phase when he meets with Chinese President Xi Jinping at next months Asia-Pacific Economic Cooperation leaders summit.
“We are very close to ending the trade war,” Trump told reporters after the meeting with Liu, who led a delegation to Washington for trade talks this week.
The detente provides some relief to U.S. markets and businesses whipsawed by tit-for-tat tariff skirmishes that have seen the U.S. slap penalties on more than $350 billion worth of Chinese goods.
A key Trump ally, Senate Finance Chairman Chuck Grassley (R-Iowa), welcomed the progress but said much work is needed to reach the comprehensive deal that many expect from the administration.
“A final deal must address the full scope of structural issues identified in USTRs Section 301 report and include strong enforcement mechanisms,” Grassley said. “After so much has been sacrificed, Americans will settle for nothing less than a full, enforceable and fair deal with China. I look forward to learning more details in the coming days.”
Business groups also expressed relief that tariffs on $250 billion worth of goods would not rise to 25 percent next week. But they noted substantial duties remain in place and more could still be on the way in December.
U.S. Trade Representative Robert Lighthizer said no decision has been made yet on whether to suspend another wave of tariffs scheduled to take effect on Dec. 15. Trump is threatening a 15 percent tariff on a wide range of consumer goods like laptops, smartphones and footwear.
“There is plenty of time to make that decision, and that is certainly part of this process that the Chinese are working their way through,” Lighthizer said in the Oval Office.
The U.S. trade chief also said the two sides were very close to an agreement on a “workable dispute-settlement mechanism” to enforce the pact.
China agreed to increase limits it has placed on foreign ownership in its financial services sector, ratchet up certain intellectual property protections and boost purchases from U.S. farmers who have suffered from Beijings tariff retaliation.
Trump said there will be $40 billion to $50 billion in new agricultural purchases. Lighthizer said China would address regulations on animal and plant health regulations and genetically modified crops, which U.S. farmers say have made it hard to sell products in the country.
“There has never been a deal of this magnitude for the American farmer,” Trump said.
Trump also said there was agreement on intellectual property practices, without providing details explaining Chinas commitments.
The outcome on intellectual property will likely tackle “20th century” issues like protection of copyrights and trademarks rather than 21st century data and cyber issues, U.S. Chamber of Commerce Executive Vice President Myron Brilliant told reporters this week.
The two countries also rolled out a previously agreed-upon deal that reaffirms international commitments to refrain from devaluing currencies to gain an export advantage.
Lighthizer said an easing of export restrictions on blacklisted Chinese telecommunications company Huawei is not part of any deal.
China has yet to make deeper changes to policies that the U.S. side says provide unfair subsidies to Chinese domestic firms, improperly control data flows and force U.S. companies into joint ventures that require them to hand over technology in order to do business in the lucrative Chinese market.
The Chinese delegation did not bring offers related to those core U.S. demands during this weeks talks, people close to the negotiations said.