WASHINGTON – The U.S. and China unveiled details of a new, limited trade agreement on Wednesday, signaling a truce in the nearly two-year trade war between the world’s two largest economies.
The “Phase One” trade deal is the product of months of intense talks between officials in Washington and Beijing. It calls for China to boost its purchase of American goods and services by $200 billion over the next two years, including agriculture products, and includes language to deal with U.S. concerns that China forces American companies to hand over their technology secrets as the cost of doing business there.
President Donald Trump and Chinese Vice Minister Liu Hu were set to sign the agreement in a ceremony in the White House East Room.
Trump boasts that the deal is “large and comprehensive” – a “big, beautiful monster” is how he described it last week in Toledo – and contends that it will open the door to further talks that could lead to an even broader agreement.
But analysts question how much the U.S. really got out of the initial agreement, other than a commitment from China to boost its purchase of American goods and services.
“This is largely a deal on Chinese terms,” said Robert Daly, director of the Wilson Center’s Kissinger Institute on China and the United States. “There is nothing we know about this deal that China wouldn’t like. And there is nothing we know about this deal that China probably wouldn’t have been willing to do some time ago.”
Daly described the deal as “purchases and pledges but no real change.”
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The Chinese delegation at the signing will be led by Liu, who was Beijing’s chief negotiator during the talks and will sign the document on behalf of his government.
Liu’s participation is significant, said Craig Allen, president of the U.S.-China Business Council, a nonprofit group representing American companies that do business in China.
“He is in charge of the economy (in China), and he is a close confidante of (Chinese leader) Xi Jinping, so his signature brings the imprimatur of the Chinese government,” Allen said. “I think it’s a very good thing.”
Liu will be accompanied by several Chinese ministers, which suggests the Chinese government is interested in entering a new phase in its trade dealings with the U.S. and that the agreement will be enforced, Allen said.
Still, “the devil is in the details,” Allen said of the agreement. “And we don’t know the details.”
Trump and Chinese officials announced the agreement in mid-December, signaling the first signs of a pause in trade tensions that rattled financial markets across the globe.
For months, the two countries hit each other with punishing tariffs in a trade war triggered by U.S. accusations that Beijing steals technology from American companies and pressures them to hand over trade secrets in order to do business in China.
At the height of the dispute, Trump slapped tariffs on more than $360 billion in Chinese imports, including farm equipment, motorcycles, mopeds, electronics, plastics and washing machines. China retaliated with tariffs on more than $110 billion worth of U.S. goods, including agriculture products, cars, auto parts, chemicals, whiskey, cigars, clothing and TVs.
As part of the Phase One deal, the U.S. agreed to shelve plans for tariffs on another $160 billion in Chinese goods that had been set to take effect last Dec. 15. The U.S. also said it would cut by half the 15% tariff rate it imposed on $120 billion of Chinese goods Sept. 1.
In return, China agreed to buy an additional $32 billion in American agricultural products, including soybeans and other crops, over the next two years, according to U.S. officials. China also promised to open its financial markets to U.S. companies, address concerns about protecting the intellectual property of American companies doing business there and enact new guidelines for how it manages its currency.
But analysts remain skeptical.
China has a long history of failing to buy as many U.S. products as it has promised, Daly said, and even if the Chinese live up to their commitments this time, there remain questions about whether U.S. farmers could produce enough crops to fill their orders.
Trump has said talks will begin immediately for a broader agreement but that it probably would not be finalized until after the November election.
Others note that the issues still on the table will be difficult to resolve and question whether a “Phase Two” agreement can be reached at all.
“If we make significant progress, that would be a very good thing,” Allen said. But he added, “these are very difficult issues. We have a hard time getting along even with the Canadians. How are we going to resolve all of these issues with the Chinese?”
Michael Collins covers the White House. Reach him on Twitter @mcollinsNEWS.