Uncertainties regarding the so-called phase 1 US-China trade deal surfaced today. According to a Bloomberg, China’s purchases of US farm products wouldn’t hit the USD 40B to USD 50B level as touted by Trump under the current term. To achieve the figure, China would need to remove some of its retaliatory tariffs. And with that in mind, China would request same reciprocal action by Trump. As we noted before, the phase 1 trade deal remains highly unsure, at least until both sides have put the agreement into texts.

Earlier today, Chinese Foreign Ministry Geng Shuang confirmed that China has bought 320,000 tonnes of cotton, 230,000 tonnes of wheat and 20 million tonnes of soybeans from the U.S. However, it’s also noted by analysts that not all orders would be delivered to China this year. And there are risks that some of the orders could be cancelled if trade tension intensifies again.

US Treasury Secretary Steven Mnuchin told CNBC today that he expected President Donald Trump and Chinese President Xi Jinping will be able to finish the trade agreement during their anticipated meeting in Chile on November 16-17. He also echoed Trump’s comments last week and said recent round of discussions covered intellectual property rights, financial services including currency and foreign exchange, and “very significant structural issues” dealing with agriculture. Though, Mnuchin also warned, “I have every expectation if there’s not a deal those tariffs would go in place”, referring to the next round of tariffs scheduled to mid-December.

On the other hand, Chinese media sounded much less enthusiastic, as Trump. On Sunday, China Daily said, “while the negotiations do appear to have produced a fundamental understanding on the key issues and the broader benefits of friendly relations, the Champagne should probably be kept on ice, at least until the two presidents put pen to paper.” It also warned, “as based on its past practice, there is always the possibility that Washington may decide to cancel the deal if it thinks that doing so will better serve its interests.”

After two day of top-level trade US-China trade negotiations, President Donald Trump announced that “very substantial phase one deal” was made with China. It would take up to five weeks to put the agreement into words, for signing at the APEC Chile summit on November 16-17. The deal covered intellectual property and financial services. Also, Trump said it’s a “tremendous deal for the farmers”, with purchase of around USD 40B to USD 50B worth of agricultural purchases. The amount would be 2.5 to 3 times what China has purchased at its highest point thus far.

On the other hand, US will delay the planned escalation of tariffs on USD 250B in Chinese imports to imports, supposed to take effect on October 15. Nevertheless, further 15% of tariffs an essentially all Chinese imports could still start on December 15, unless the second phase could be agreed.

Treasury Secretary Steven Mnuchin said “I think we have a fundamental understanding on the key issues. We’ve gone through a significant amount of paper, but there is more work to do.” But he also emphasized “we will not sign an agreement unless we get and can tell the president that this is on paper.” Chinese Vice Premier Liu He said “We have made substantial progress in many fields. We are happy about it. We’ll continue to make efforts.”

China is pushing for a partial trade deal with the US with its state media. The China Daily newspaper said in an editorial that “A partial deal is a more feasible objective. Not only would it be of tangible benefit by breaking the impasse, but it would also create badly needed breathing space for both sides to reflect on the bigger picture.” Though, it also warned that

It’s believed that China is offering to increase annual purchases of US agricultural products, in exchange for further delay in the next tranche of tariffs. Also, there could be some form of currency agreement but it’s unsure if there will be anything new other than the usual pledges.

Trade talks will continue for a second day in Washington today. Trump is scheduled to meet Chinese Premier Liu He at 1845 GMT after the meeting.