U.S. vs China Trade War, Is There Light at the End of the Tunnel?

On Friday, October 11th, 2019, President Trump announced a three- phase trade deal with China. The agreement is an outline of a partial trade accord that President Donald Trump said he and Xi Jinping could sign as soon as next month at an upcoming November summit in Chile. To say the least, there is a great deal of pressure on President Trump to get this deal signed with both the upcoming holiday season, and of course the 2020 election year. Trump tweeted earlier Friday that if the countries did reach an agreement, he would be able to sign it without a lengthy congressional approval process. Treasury Secretary Mnuchin announced the suspension of additional duties (from 25% to 30%) scheduled to go into effect on October 15, 2019 on $250 billion of goods (Lists 1, 2, and 3). However, this deal does not affect the tariffs scheduled to go into effect on December 15, 2019 for products on List 4B.

What we know so far: In the three- phase deal, Phase 1 will cover intellectual property and financial services concerns, including an agreement where China would gradually increase its purchases of U.S. farm goods over two years to an annual total of $40 billion to $50 billion. China in recent weeks had already discussed buying more U.S. products such as soybeans, pork and wheat. This phase will be written over the next three weeks. Phase 2 will commence immediately thereafter and deal with technology transfer. It is not clear what issues Phase 3 would cover at this time, as there are still several issue to iron out. In the meantime, while there is a stir of optimism on Capitol Hill,  some feel that the limited agreement may resolve some short-term issues, but several of the larger, and more important issues remain in check mate, not to mention the elephants always in the room, which are intellectual-property theft, forced technology transfer and Chinese industrial subsidies.

Stay tuned, stay focused, and above all, stay compliant.