Sigh of Relief For Global Markets as First Bus Easing US-China Trade War Arrives

Easing the 20-month long US-China Trade War, US and China are set to sign Phase 1 of the trade agreement that will focus on withdrawing spiking tariffs and making purchase commitments. US and China will withdraw $250 bn and $110 bn tariffs imposed respectively in phases.

Crux of the Matter
  • Global Market has taken a sigh of relief as the largest trade war has received a pause and seen ointments being spread over on the tariffs that were imposed by both the nations, namely USA and China.
  • USA will start rolling back the $370 bn tariffs imposed on China, while China will commit to gradually lifting up the 5-25% tariffs and to make certain purchase agreements. The deal also has detailed terms for technology transfer and intellectual property rights, on which USA has condemned China by alleging it of facilitating its agencies in stealing IPRs.
  • The largest US tariff is on manufacturing goods, 25% on $250 bm worth of goods. That remaining intact, China has also not made any specific commitments of buying agricultural products. However, an approximate number was released by US’ Dept. of Agri that said China has agreed to buy 585,000 tons of US soybeans.
  • USA’s Chief Trade Negotiator, Robert Lighthizer, agreed that there is a setback to this deal as it does not address China’s systemic methods of conducting business like subsidizing trade and other industrial policies.
  • China has taken the deal with a pinch of salt. A Minister in China’s Commerce Chamber has warned China to be prepared for any sudden changes in the deal.
  • “The phase one deal is temporary reconciliation, not complete ceasefire, between China and the US. It’s difficult for the two countries’ relations to return to where they were before the trade war broke,” said Deputy Director of Info at CCIEE, Wang Jun.

The China–United States trade war is an ongoing economic conflict between the world’s two largest national economies, China and the United States. President Donald Trump in 2018 began setting tariffs and other trade barriers on China with the goal of forcing it to make changes to what the U.S. says are “unfair trade practices”. Among those trade practices and their effects are the growing trade deficit, the theft of intellectual property, and the forced transfer of American technology to China. More Info