Donald Trump hailed a "historic milestone". US President and Chinese negotiator Liu He signed an agreement at the White House on Wednesday that marks a truce in the two countries' trade war. Donald Trump has also indicated that he intends to visit China soon. The deal is good "for the world," said Chinese counterpart Xi Jinping in a letter to Trump.
Begun in the spring of 2018 to put an end to Chinese trade practices deemed to be “unfair”, this conflict was materialized by reciprocal punitive customs duties on hundreds of billions of dollars in goods.
However, the specter of customs tariffs still lurks since Treasury Secretary Steven Mnuchin warned Wednesday on CNBC, a few hours before the ceremony, that if Beijing does not honor its commitments, Washington was willing to increase them.
"We are keeping the (customs) tariffs but I will accept to delete them if we manage to conclude phase 2", addressing more sensitive issues such as cybersecurity, said Donald Trump. "I will keep them or we will not have any cards in hand to negotiate.
White House adviser Larry Kudlow defended the strategy of maximum pressure. "Customs tariffs were a fundamental part" in getting the deal, he said on CNBC. "Donald Trump was right." The administration predicts that this agreement will boost the growth of the world's largest economy by half a percentage point.
American agriculture hit hard
This showdown has hard hit the agricultural world and the manufacturing industry in the United States, the very people who brought the Republican president to power in 2016. Donald Trump bet on their patriotism, asking them to be patient before better tomorrows.
His administration believes that the trade war is a necessary evil to rebalance trade with the Chinese partner. The former businessman, who claimed that trade wars were easy to win, also repeatedly said that the US economy was not affected by tariffs when Chinese growth slowed.
However, this unprecedented conflict by its intensity and duration, has dampened the appetite of investors and therefore global growth like Chinese and American growth. What is more, most of the cost of customs tariffs was borne by American importers.
The confrontation also aroused anger, sometimes despair in the agricultural world. Just one example: US soybean exports to China plummeted in 2018, to $ 3.1 billion from $ 12.3 billion in 2017. In less than two years, China has been relegated from second to fifth room for exports of American agricultural products.
Customs tariffs maintained by Washington
To mitigate the losses, the Trump administration had to release a total of $ 28 billion in aid between 2018 and 2019. Little comfort for farmers, who have repeatedly asked for a negotiated solution to resume farming rather than being kept alive on a drip.
Beijing will purchase $ 200 billion in additional US products over a two-year period compared to the 2017 purchase level. These purchases include $ 77.7 billion in additional purchases from the manufacturing sector, $ 52.4 billion from the manufacturing sector. energy, 37.9 billion services and 32 billion agricultural products, says the 94-page text, which is published in its entirety.
The first chapter of the Sino-US agreement also contains provisions relating to the protection of intellectual property, another major requirement of the United States. In exchange for the Chinese commitments, Washington has given up imposing new customs duties on China and cut in half those imposed on September 1 on $ 120 billion in Chinese goods.