US and China sign 'phase one' trade deal

Legislation | | MIC Customs Solutions |

There was positivity between China and the US this week as a new agreement was signed.

The US and China met at a ceremony in Washington this week to sign a 'phase one' trade deal designed to ease some of the tensions between the two economic superpowers.

US president Donald Trump called the pact "transformative" for America's economy, while China referred to it as a 'win-win' situation.

"Together we are righting the wrongs of the past and delivering a future of economic justice and security. Far beyond even this deal, it's going to lead to an even stronger world peace," Mr Trump commented.

Chinese vice premier Liu He added that the new deal was based on "equality and mutual respect".

Although US trade representative Robert Lighthizer was perhaps a little less optimistic and conceded neither country is in an ideal spot, he did agree the signing was a "massively good first step".

As part of the agreement, China has promised to increase US imports and strengthen intellectual property rules to provide better protection against counterfeiting.

Meanwhile, the US has said it will halve some of the most recent retaliatory tariffs it imposed on US products.

This has been repeatedly described as a 'phase one' agreement and further talks will now be scheduled to discuss other issues between China and the US.

A trade war involving the two nations began back in 2018 as part of Mr Trump's protectionary stance designed to put America first. However, it has resulted in a raft of tit-for-tat tariffs on billions of dollars' worth of traded products that have damaged economic growth worldwide.

Research from the Peterson Institute for International Economics suggests average tariffs on both sides are still up by 20 per cent compared to levels before the trade war.

In Hong Kong this month, former Federal Reserve chair Janet Yellen said allowing the trade war to rumble on could slow the development of technology such as artificial intelligence and national security products.

This new deal will therefore be seen as a very welcome move by many, although Capital Economics has already warned it "does not mark the end of tensions" quite yet.