Key Points of Phase I of the Trade Deal

• December 22, 2019
• Paul Neiffer

Right before 15% tariffs were to be placed on another $110 billion of Chinese goods, the US and China reached a Phase I deal.  The actual documentation has not been fully released, but this appears to be the key points in the deal:

• Reduces tariffs from 15% to 7.5% on List 4A – $160 billion of Chinese goods,
• Suspends December 15 scheduled 15% tariffs on List 4B – $110 billion of Chinese goods,
• Does not increase, reduce or remove 25% tariffs on Lists 1-3 – $250 billion of imports from China,
• US says China will purchase $40-50 billion in agricultural, manufacturing and services,
• Removes trade barriers for US financial services,
• Addresses Intellectual Property theft enforcement and forced technology transfer,
• Removes China as a currency manipulator.

The US had planned on increasing tariffs to 30% on List 1-3 items, but those tariffs will remain at 25%.  China will also not increase tariffs on US goods including automotive parts, but will keep existing tariffs in place.

How China can reach a target of $40-$50 billion of agricultural goods still remains in doubt until final details are released.  We have seen several reports on how it may happen, but unless it really does happen, President Trump can still trigger additional tariffs is China does not follow through.

Phase II of the trade deal is under way and it may not occur until after the election.  But it does appear that a Phase I deal has been reached.

 

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