Tariff increases on Chinese goods scheduled to take effect Tuesday have been suspended in the wake of President Trump’s announcement Friday of a “substantial phase one deal” to begin to resolve the 18-month U.S.-China trade war.
Negotiators are drafting a truce in which China will buy $40 billion-$50 billion in U.S. farm products in exchange for tariff relief.
On Saturday, the president on Twitter trumpeted the proposed pact as, “by far, the greatest and biggest deal ever made for our Great Patriot Farmers in the history of our Country.”
Mr. Trump will not increase levies from 25% to 30% on $250 billion worth of Chinese goods Tuesday, as previously planned, though tariffs set to hit in December are still on for now.
The tentative deal isn’t written yet. Negotiators will work on a draft and revisit it at mid-November meetings in Chile.
The president previously said he wanted to strike a single big deal with China, though on Friday he said it makes sense to handle such a major pact in sections. He said “phase two” will start immediately after they finalize the first stage.
Thorny issues appear to remain, including China’s tendency to subsidize core industries and force U.S. companies to transfer technology to Chinese partners.
Mr. Trump said they made progress on technology transfers and will deal with it partially in phase one.
Chinese tech firm Huawei, a controversial player in 5G technology, is not part of the pact, though Mr. Trump said the parties did reach some form of agreement on intellectual property.
Stocks on Wall Street rose substantially on positive trade developments Friday, but the market pared some of its gains late in the day when the details emerged.
Senate Finance Chairman Charles E. Grassley said the first-phase deal was good news for farmers, though follow-through will be key.
“After so much has been sacrificed, Americans will settle for nothing less than a full, enforceable and fair deal with China,” the Iowa Republican said.
The U.S. and China have been trading tit-for-tat tariffs on each other’s goods for months, rattling investors, importers and retailers. The National Retail Federation welcomed Friday’s progress but said “uncertainty continues” and they’d like to see all tariffs lifted.
Overall talks between the two nations fell apart earlier this year but resumed in recent weeks.
Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert E. Lighthizer hosted a Chinese delegation led by Vice Premier Liu He on Thursday and Friday in Washington.
Mr. Liu sat in the Oval Office on Friday across from Mr. Trump, who struck a softer tone than usual in speaking about his geopolitical rival.
He praised the Chinese as tough negotiators and said he was impressed by ceremonies marking the 70th anniversary of the start of communist rule in Beijing.
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