Washington: The world’s two dominant economic powers, the United States and China, are poised to sign a trade truce Wednesday letting businesses around the globe breathe a sigh of relief.
After a nearly two-year battle, the signing could give US President Donald Trump an election-year boost as well. Still, tariffs on hundreds of billions of dollars in imports remain in place, leaving many Americans to foot the bill.
The ‘phase one’ agreement – which includes pledges from China to beef up purchases of American crops and other exports – also comes just as Trump faces an impeachment trial in the US Senate, giving him a victory to trumpet at least in the short term.
The easing of US-China trade frictions has boosted stock markets worldwide in recent weeks, as it takes the threat of new tariffs off the table for now.
Treasury Secretary Steven Mnuchin said Trump’s negotiating stance led to a ‘fully enforceable deal’ which could bring additional tariffs. If China fails to abide by the agreement, ‘the president has the ability to put on additional tariffs’, Mnuchin said on ‘CNBC’ Wednesday as part of a media blitz promoting the new pact.
However, the most difficult issues remain to be dealt with in ‘phase two’ negotiations, including massive subsidies for state industry and forced technology transfer.
But Mnuchin said the deal puts pressure on Beijing to stay at the negotiating table and make further commitments, including on cyber-security and other services to win relief from the tariffs that remain in place.
“In phase two there will be additional roll backs,” Mnuchin said. “This gives China a big incentive to get back to the table and agree to the additional issues that are still unresolved.”
Agencies