First Phase Of The Trade Deal Has Been Substantial – White House

Following President Trump’s meeting with Vice Premier Liu He in the White House on Friday, October 11^th, 2019, the officials have reported it to be a substantial first phase of the trade deal between the United States of America and China. As expected, the tariff hike on Chinese goods that was intended for October 15^th has also been pushed back. The decision for increasing the tariff on December 15, however, has not been reached. Trump administration has made it clear that the prospect for it has not yet been minimized.

Components Of The Interim Trade Deal

Upon China’s request, the government of the U.S has agreed to reconsider its allegations on China as a currency manipulator. President Trump has ensured that the matter will be meticulously scrutinized before any further discussion on it. He has also highlighted that he’s open to reviewing the blacklist comprising of Chinese firms that have been banned to do business with American companies, and make the necessary amendments if required.

Further agreements made in the interim trade deal include the purchase of U.S based agricultural products by Chinese businesses. The matter of Huawei was, however, not brought up in the deal. In a press conference, President Trump has stated that it will be discussed separately at a later stage.

While the interim deal has been finalized verbally, it is yet to be turned into a signed written agreement. According to the officials from the White House, phase two of the negotiations will begin once the terms and conditions of phase 1 have been put into action.

The two largest economies of the world have been indulged in a trade war for almost 2 years. President Trump’s latest statement that the relationship between the U.S and China is now better than ever in the history, however, is anticipated to ease it off and stabilize the financial markets in the long run.

Financial Markets’ Response So Far

The financial markets had remarkable gains throughout the week in anticipation of the U.S – China trade negotiations. While a clearer picture regarding the market intention will be revealed with the new week on Monday, as per the financial analysts, the investors have decided to sell the announcements of yesterday. Dow Jones index fell from 27,005.68 level to around 26,800 level. On the other hand, S&P 500 presented a sharp decline from 2,991.71 to 2,969.41 level following the news.

Traders of the Forex market have also sold offshore Yuan (CNH) sending USD/CNH pair to as high as 7.0923 level.