China and USA strike preliminary trade deal

China and the USA announced on 13 December that they had reached a preliminary trade deal including some tariff relief, increased agricultural purchases and structural change to intellectual property and technology issues.

The trade war between the world’s two largest economies has taken a toll on world economic growth and hit American soyabean farmers particularly hard, with China cutting back on purchases of the oilseed since their dispute began 17 months ago.

US President Donald Trump said his administration would cancel its next round of tariffs on Chinese goods, which had been set to take effect on 15 December, CNBC reported. In tweets, he added that the White House would leave 25% tariffs on US$250bn in imports in place while cutting existing duties on another US$120bn in products to 7.5%.

Beijing would increase agricultural purchases significantly, Vice Minister of Agriculture and Rural Affairs Han Jun said, although he did not specify by how much.

US trade representative Robert Lighthizer said the two countries aimed to sign their agreement in January, adding that Washington would not impose new duties as long as Beijing negotiated in good faith.

Trump also said that the USA would begin negotiations on the next phase of the trade deal “immediately, rather than waiting until after the 2020 [US] election”, CNBC said.

The two countries said they would move to make changes related to intellectual property, technology transfers and financial services, the initial trigger for the trade war, with the USA accusing China of discriminatory policies back in July 2018. Since then, the two countries have imposed billions of dollars worth of retaliatory tariffs on each other’s goods.

CNBC reported Trump saying that he would use the existing tariffs as a negotiating tool in future discussions.

China was the top buyer of US soyabeans before the trade war began and a 22 August CoBank cooperative bank report said the total export value of US soyabeans for 2018/19 was down nearly 50% as a result of the dispute.