US Trade Representative Robert Lighthizer confirmed again on Sunday that the phase one trade deal with China is “totally done, absolutely”. He also told CBS that it’s “not just about agriculture and other purchases”. He emphasized, “the way to think about this deal, is this is a first step in trying to integrate two very different systems to the benefit of both of us.”

Though, he also admitted that “ultimately, whether this whole agreement works is going to be determined by who’s making the decisions in China, not in the United States”. “If the hardliners are making the decisions, we’re going to get one outcome. If the reformers are making the decisions, which is what we hope, then we’re going to get another outcome”, he added.

US Trade Representative confirmed in a formal statement that US and China have reached an “historic and enforceable” agreement on a Phase one trade deal. The deal requires “structural reforms and other changes to China’s economic and trade regime in the areas of intellectual property, technology transfer, agriculture, financial services, and currency and foreign exchange.” Also, China commits to make “substantial additional purchases of U.S. goods and services in the coming years.” A strong dispute resolution system is established with the deal that “ensures prompt and effective implementation and enforcement.”

Meanwhile, USTR said “The United States will be maintaining 25 percent tariffs on approximately $250 billion of Chinese imports, along with 7.5 percent tariffs on approximately $120 billion of Chinese imports.”

US President Donald Trump also tweeted: “We have agreed to a very large Phase One Deal with China. They have agreed to many structural changes and massive purchases of Agricultural Product, Energy, and Manufactured Goods, plus much more. The 25% Tariffs will remain as is, with 7 1/2% put on much of the remainder. The Penalty Tariffs set for December 15th will not be charged because of the fact that we made the deal. We will begin negotiations on the Phase Two Deal immediately, rather than waiting until after the 2020 Election. This is an amazing deal for all. Thank you!”

In a delayed press conference, Chinese Vice Commerce Minister Wang Shouwen said the text of trade deal phase one was agreed with the US. And there will be removal of tariffs on Chinese goods in stages. Also, China will increase imports from US and other countries.

Markets are rocked by US President Donald Trump’s tweet again. He complained that WSJ’s story regarding US-China trade deal was “completely wrong, especially their statement on Tariffs.” He added, “Fake News. They should find a better leaker!”

Trump said yesterday that he’s getting “VERY close to a BIG DEAL with China.” WSJ  indicated US would cut the currently imposed tariffs by 50% as part of the deal. New tariffs would be put on hold. China generally believed to offer to step up US farm products purchases in 2020, possibly doubling from the value in 2017 to USD 50B.

Markets are expecting some form of formal announcement to be made today by US administration. It remains to be seen if that would happen.

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It’s reported that US President Donald Trump has already signed off the phase one trade agreement with China. A formal announcement is expected on Friday. The terms are believed to be generally agreed even though it could take some more time to finalize the legal texts.

Under the agreement, China would buy as much as USD 50B in US farm products in 2020, doubling the purchases in 2017, before the start of trade war. Both sides would also cut the currently imposed tariffs by 50%. New tariffs would be put on hold.

The news is welcomed by businesses. US-China Business Council President Craig Allen said “If signed, this is an encouraging first phase that puts a floor under further deterioration of the bilateral relationship. But this is just the beginning. The issues facing the US and China are complex and multi-faceted. They are unlikely to all be resolved quickly.”

However, the reactions from politicians are mixed, even within Trump’s Republican party. Republican Senator Marco Rubio warned, “White House should consider the risk that a near-term deal with China would give away the tariff leverage needed for a broader agreement on the issues that matter the most such as sub sidies to domes tic firms, forced tech transfers & blocking U.S. firms access to key sectors”.

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