After almost two years of ever-increasing tariff negotiations, the US and China have come to a preliminary “phase one” bilateral trade agreement. Key points of the agreement include agricultural exports from the US to China, intellectual property securities and both a reduction of current tariffs on the first three tranches of duties and a cancellation of the List 4B tariffs that were expected on December 15th. As it stands, there are a number of other issues to be hammered out as negotiations continue into the new year, but for now, it’s refreshing to see progress coming on the horizon.
China has agreed to purchase more than $200 billion in US goods over the next two years from manufacturing, energy and services. $50 billion of that figure is expected to come in the form of agriculture purchases in 2020, which has piqued analysts as that figure is more than twice the agriculture buys of China in 2017. Both sides have agreed to employ bilateral consultations to resolve disputes, including the removal of these tariff decreases in case the deal is not upheld.
Other parts include China easing pressure to hand over technology to access the Chinese market, an enhancement to China’s intellectual property protections and a promise by the Chinese government to not devalue their currency. While the notes are coming out regularly, we have not seen the actual agreement and must go by statements made from the USTR and other trade sources. Rumored to be more than 400 pages, there will be many more points to cover once it’s released. For now, it’s a good feeling that we didn’t face new tariffs on December 15th, and we’re awaiting the decrease on the first three lists which have caused havoc in markets as negotiations lingered.
Negotiations will proceed past the first phase will continue in the coming new year and as always, you can count on Everglory Logistics to have pertinent information ready. We’d like to wish all of our readers a very safe and happy holiday season! Thank you for making 2019 a great year for Everglory!