Finally, the 18 month long US-China trade conflict has come to an end with a preliminary trade deal. The deal was signed by the US president Donald Trump and Chinese Vice President Liu He.
According to the deal signed, US will reduce 15 per cent tariffs imposed on a wide range of Chinese consumer goods by half and also cancel another round of tariffs implemented in December. China will buy additional $12.5 billion worth of agricultural products from the US in the first year and $19.5 billion worth of goods in second year.
The deal also states that these purchases will be a part of a broader $200 billion package that includes manufactured goods and energy exports by 2021. It will continue beyond the two year deal into 2022 through 2025. Some of the products that China has promised to but include soybeans, wheat, cotton and pork.
The above changes will take place within 30 days of signing of the pact. This deal will protect the American companies from thefts of intellectual property and trade secrets by imposing anti-counterfeiting measures on them. It will also help in removing barriers in the sale of US technologies and make the requirements of Chinese banks wanting to operate in the country less rigid.
The trade deal has gained full support from US National Retail Federation. Matthew Shay, CEO of the Federation said, “We support the US administration’s efforts to address the unfair trade practices adopted by China. The trade war won’t be over until all of these tariffs are gone.”
However, the trade deal didn’t get the required support from the apparel and footwear industry. According to Steve Lamar, President and CEO of American Apparel & Footwear Association (AAFA), the deal provides the apparel and footwear industry with very limited tariff relief following the biggest tariff increase since the Great Depression. “Tariffs will continue to hit all our products including 92 per cent of the apparel, 53 per cent of the footwear, 68 per cent of the home textiles, and all of the travel goods and accessories that are imported from China, which is the primary source of these products. Not only does the deal retain the tariffs on key imports of materials and machinery used to make clothing, footwear and textiles in the US, it also allows China to impose huge retaliatory tariffs on American exports of cotton, hides, leather, textiles, shoes and clothing. The tariffs van thus be used as an enforcement mechanism leading to new tariffs at any time. Therefore, it cannot be an effective way to change policies and practices in China”, Lamar added.