WASHINGTON (AP) – The Trump administration has dropped its plan to impose new tariffs on $160 billion of Chinese imports beginning Sunday under a modest interim deal that de-escalates a 17-month trade war between the world’s two biggest economies.
As part of the agreement announced Friday, the administration is also reducing its existing import taxes on about $112 billion in Chinese goods from 15% to 7.5%.
In return, U.S. Trade Representative Robert Lighthizer told reporters, China agreed to buy $32 billion in U.S. farm products over two years. Beijing has also committed to ending a long-standing practice of pressuring companies to hand over their technology as a condition of gaining access to the Chinese market.
Lighthizer said China had also agreed to lift nontariff barriers to the Chinese market for such products as beef, poultry, seafood, pet food and animal feed.
In all, the U.S. expects a $200 billion boost in exports over two years as a result of the deal.
“We expect the trade deficit to go down for sure,” Lighthizer said, adding that the deal will likely be signed the first week in January and take effect 30 days later.
“Everything is written," he said. "Everything is completely finished.”
Yet the administration released no detailed paperwork on the agreement and said the text was still being translated between Chinese and English. In the past, the two sides had appeared to be close to firm agreements only to see negotiations fall apart.
The so-called Phase 1 agreement leaves some major issues unresolved, notably U.S. complaints that China unfairly subsidizes its own companies to give them an edge in world markets.
The deal does, however, at least temporarily defuse a conflict that has unnerved financial markets and hobbled global economic growth.
“This deal should go a long way in reversing the downward spiral in bilateral trade relations and increasing certainty for U.S. businesses,” said Wendy Cutler, a former U.S. trade negotiator who is now vice president at the Asia Society Policy Institute.
But, Cutler cautioned, “it’s unclear on how far the Phase 1 agreement goes in addressing the key structural issues that brought the U.S. to the negotiating table 17 months ago.”
President Donald Trump, who first announced the agreement via Twitter, said that work on a follow-up Phase 2 agreement would begin immediately.
That announcement came minutes after the House Judiciary Committee approved impeachment charges of abuse of power and obstruction of Congress, leading the White House to argue that the president “never stops working and continues to make successful deals that benefit this country.”
Chinese officials said at a briefing in Beijing that if the administration reduces its tariffs, China will lower its trade penalties on American goods and also scrap plans for new tariffs Sunday.
Associated Press writers Christopher Rugaber and Darlene Superville in Washington and Joe McDonald in Beijing contributed to this report.