U.S – China phase 1 trade deal is awaiting President Trump’s signature

In an attempt to dilute the trade war, China announced on Thursday that it is willing to increase its purchase of U.S agricultural products to $50 billion in the upcoming year. In response, the United States of America reciprocated with lifting tariffs from a few of the Chinese products while reducing them on others.

China To Purchase $50 Billion Of American Agricultural Products

As per the sources, the White House has expressed inclination towards suspending the December 15^th tariff hike that was scheduled to apply on an additional $160 billion of Chinese imports. Several of the previously imposed tariffs are expected to be rolled back as well. Chinese purchase of U.S agricultural products worth $50 billion is twice the amount that China spent in 2017 on these products before the two largest economies of the world locked in a trade war.

As per the sources, Washington agreed to cut the existing tariffs by 50% following Trump’s meeting with the advisers on Thursday. However, since an official statement has not been released by the Trump Administration so far, questions on the authenticity of the news still remain.

Owing to the domestic and global economic slowdown driven from the U.S – China trade tensions, President Trump has announced subsidies worth $28 billion for U.S farmers who took the hit.

In light of the recent developments, the sources further added that the two countries have reached a phase 1 deal in principle that is currently awaiting Trump’s signature. According to Craig Allen, President of the U.S – China Business Council, while further complications remain to be addressed, the current deal will mark a massive victory and pave the way for trade relations between the U.S and China in the upcoming years.

China Will Retaliate With Punitive Tariffs If Trump Refuses To Sign

In a previous agreement, China had pledged to purchase $40 billion of American agricultural products.

In an event that confirmation on the aforementioned terms and conditions of the phase 1 deal is not received from the White House, and President Trump chooses to proceed with the December 15^th tariff hike on $160 billion of Chinese goods, China is likely to retaliate with punitive tariffs on American imports as well. Trade talks can also be expected to be suspended until the Presidential election in November 2020, in such an event.

In the forex market, the U.S dollar printed massive gains against the CNY on Thursday. Starting the day at around 7.0380, the pair was last seen trading as low as 6.9660.