The U.S. and China mutually agreed to terms of a trade agreement on Friday that reduce tariffs on Chinese goods while boosting Chinese purchases on farm, manufacturing, and energy goods from the U.S. The deal also addresses intellectual property issues the two countries have been fighting over for over two years.
The United States will not proceed with 15% tariffs scheduled to go into effect today on nearly $160 billion worth of Chinese goods, including cell phones, laptop computers, toys and clothing. In return, China has also cancelled its retaliatory tariffs, including a 25% tariff on American automobiles. According to Reuters, U.S. officials say China agreed to increase purchases of American products and services by at least $200 billion over the next two years, with an expectation that the higher purchases will continue after that period. The purchases include manufactured goods, agricultural goods, energy and services, and are expected to reduce the $419 billion U.S. trade deficit with China, officials told Reuters. China has committed to increase purchases of U.S. agriculture products by $32 billion over two years. China has committed to reduce non-tariff barriers to agricultural products such as poultry, seafood and feed additives as well as approval of biotechnology products. The deal includes stronger Chinese legal protections for patents, trademarks, copyrights, including improved criminal and civil procedures to combat online infringement, pirated and counterfeit goods. China has also agreed to follow through on past pledges of to eliminate any pressure for foreign companies to transfer technology to Chinese firms as a condition of market access, licensing or administrative approvals and to eliminate any government advantages for such transfers. Currency manipulation, improved access to Chinese financial services markets, and agreement to penalties if China doesn’t hold up its end of the bargain are also all a part of the trade pact.
18th District Congressman Darin LaHood said its a big win for Illinois agriculture and for the country: “I applaud President Trump and Trade Ambassador Robert Lighthizer for their efforts to level the playing field on intellectual property, forced technology transfers, and bringing down barriers to entry. Illinois corn and soybean farmers have felt the impact of the ongoing trade dispute with China, and the tariff relief will provide much-needed help for agriculture and manufacturers, including Caterpillar, John Deere, and ADM. As the Administration continues negotiations with Beijing, I’ll make certain Midwest agriculture and manufacturing have a seat at the table as a member of the House Ways and Means Committee.”
Many political pundits have said that the recently agreed upon USMCA and this new deal with China will likely grow the U.S. economy by 2% next year, fighting off a forthcoming recession.