Bringing a sort of relief to
the global trade, China and the US struck a deal under which Beijing will
‘significantly increase’ its purchases of American goods and services to reduce
the whopping USD 375 billion trade deficit with Washington leading to an end to
the trade war.
In a joint statement issued
by the two sides, they said that they ‘are putting the trade war on hold.’
a consensus on taking effective measures to substantially reduce the US trade
deficit in goods with China," the joint statement said. "To meet the
growing consumption needs of the Chinese people and the need for high-quality
economic development, China will significantly increase purchases of United
States goods and services," it added. This will help support growth and
employment in the US. US Treasury Secretary Steven Mnuchin said the US and China had agreed to back
off from imposing tariffs on each other.
"We have made very meaningful progress and we
agreed on a framework," Mnuchin told Fox News Sunday. "So right now
we have agreed to put the tariffs on hold while we try to execute the
President Donald Trump has threatened punitive
measures against Chinese goods if Beijing does not cut down the trade deficit
by USD 100 billion in a month and USD 200 billion by 2020. The US says it has a
USD 375 billion trade deficit in the USD 636 billion worth of total trade last
year. China says the trade deficit is around USD 200 billion.
China too threatened a tit-for-tat retaliation but
blinked in the end with a categorical undertaking to import more goods from US.
The two sides agreed on meaningful increases in US agriculture and energy
The US will
send a team to China to work out the details, said the joint statement at the
conclusion of the trade delegation level talks. The US delegation included
Mnuchin, Secretary of Commerce Wilbur L Ross, and US Trade Representative
Robert E Lighthizer. The Chinese delegation was led by Vice Premier Liu He, the
Special Envoy of President Xi Jinping. The two sides also discussed expanding
trade in manufactured goods and services with a consensus on the need for
favourable conditions to increase trade in these areas.
state-run China Daily that the trade talks are "quite successful, very
meaningful and very fruitful".
what will be followed up in the coming months, Liu said that the two sides will
see where "we have reached the consensus", and that they have already
established some working groups, including the agricultural group, for
consultations on concrete areas. "Maybe some US government ministers will
lead the groups to Beijing and will meet our colleagues to have deeper
discussions with us and try to make concrete deals," he said.
The agreement came after reports that China has agreed
to cut the deficit by USD 200 billion. A draft framework of US demands include
that China cut the trade deficit by at least USD 200 billion by the end of 2020.
Washington also demanded Beijing halt subsidies for industries under the 'Made
in China 2025' plan, and that China should not resort to retaliatory measures
against the US. The trade spat between the top two economies of the world began
last month with Trump imposing tariffs on steel and aluminum imports into the
US. China retaliated by imposing additional tariffs worth USD three billion on
128 US products. Trump, while demanding China reduce the USD 375 billion by USD
100 billion, responded with USD 50 billion tariffs on Chinese products. In
further retaliation, China announced plans to impose new tariffs of 25 per cent
worth USD 50 billion on 106 American products including items like soybean
which could hurt US farmers. The two countries have not yet implemented the
Meanwhile, the opposition Democratic Party criticized
the Trump administration for having failed to make much progress in trade
disputes with China. "We also discussed very important structural issues
that they are going to make in their economy to make sure that we have a fair
ability to compete there, and also protections about technology, which have
been very important to the president," Mnuchin said. When asked if the
president's threat of USD 50 billion in tariffs on Chinese goods and USD 150
billion are all on hold, he said, "Yes they are. And the president had a
very productive meeting with the vice premier in the Oval Office, with all of
us and the vice president. He heard these commitments himself and he can always
decide to put the tariffs back on if China doesn't go through with their
commitments," Mnuchin said.